Daily Commentary: November 04, 2025

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The Sky Is Falling!

Posted by Pete Stolcers on November 04
www.oneoption.com

Keep your emotions in check. We want this drop.

PRE-OPEN MARKET COMMENTS TUESDAY – OMG, the S&P 500 is down 70 points overnight. That’s it, the rally is over and stocks are going to hell in a handbasket. Sell everything!

Get a freaking grip people. WE NEED THIS DROP!!!

For the last few months we have been passively trading the rally for exactly this reason. Sooner or later the market was going to drop and these “fluffy” light volume gains were going to be challenged. That’s why we have been selling short term OTM puts. Moves like this won’t impact us and we can weather them. Most of those positions have expired into earnings season. Now we are ready to reload.

What do we want to see? A drop to $674 with an immediate bounce would confirm the breakout and demonstrate that buyers are aggressive. Most of these drops have only lasted a day. I hope we do NOT see this pattern because it would put us right back into a gradual float higher on light volume.

I believe this move could have legs. Yesterday I mentioned that three down days off of a relative high have produced follow through selling this year. The shutdown continues and it is doing economic harm. It is already the second longest in history and investors will get nervous. We don’t have any employment data and we will hear from ADP tomorrow and Challenger on Thursday. If these releases are weak, the market will drop.

Could the market test AVWAPQ? Yes. Could it test the 50-day MA? Yes. Could it test the 100-day MA? Yes, that is only 100 points from the low on October 10th.

How will I know if this is a dip or a drop? How we get from point A to point B matters. If the pullback is stubborn with mixed overlapping candles, it won’t get too far and it won’t last long. If we see consecutive long red candles with follow through, sellers have some power and we will easily test the 100-day MA. If that’s the case, we have to be more cautious trading bounce.

Yes, I said bounce. I am not focused on trading this drop, I am focused on trading this bounce. Bull markets die hard. The dips have been brief and shallow indicating a strong bid. We’ve been begging for a drop for weeks so that we can buy it. Now that we have one you are getting cold feet. Some of you are going to do a 180 and instantly flip bearish. Get a hold of yourself and understand where our odds are.

The market is not going to instantly crash. That’s not how this works. If there is a longer term trend reversal pending, it is going to take time for that to happen. A fast deep drop is the first warning sign. A slow recovery that can’t get back to the previous high is a second warning sign. This takes a month or two to unfold… if it is going to play out. We haven’t even gotten to first base for crying out loud. For all we know, this drop is going to reverse instantly.

As far as I’m concerned, the farther we drop, the better. When the market finds support, the bounce will be taller and the momentum will be sustained. I have very little exposure by design so I hope sellers give it their best shot.

Warren Buffet is largely in cash. He was largely in cash in 1999 and he missed huge gains the last two years of the dotcom rally. Michael Burry is short NVDA. He has been short since May and he is down about 40% on that trade. Some of you will find reasons to get super bearish into year end. Good luck.

Support is at $674 and resistance is the low from Monday.

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