What to Know as Bitcoin Falls Into a Bear Market and Stocks Break Support

After miserable market action on Thursday, there is a little bounce action on Friday morning, but the very important PCE Inflation report is looming and Bitcoin has dropped more than 25% from its highs and is now in a bear market.

There are several issues plaguing the market, but they are all forms of uncertainty. President Trump is threatening to impose some tariffs next week, but there is still  slight hope that deals will be made to delay the impact.

Nvidia's NVDA earnings report on Wednesday night was solid, but there is growing uncertainty about the AI boom and whether aggressive infrastructure spending will continue. The Magnificent Seven MAGS names are in a clear downtrend and hit their lowest level since the spike that occurred after the Trump victory on November 5.

The other area of uncertainty is inflation and economic growth. The Core PCE report that is due on Friday morning is expected to tick up slightly, but interest rates have been falling steadily due to concerns that economic growth is slowing. Consumer sentiment is dropping while inflation expectations have been building, and the tariff issue is creating a high level of uncertainty and confusion.

Technically, the indexes broke some weak support levels on Thursday, and there is little reason to trust a bounce with the tariff issue looming. Inflation news won’t matter much, either, if tariffs come into play.

Investor's Business Daily has cut its suggested exposure level to 20%-40% from 40%-60% after the poor action on Thursday and noted that there were no new technical breakouts in individual stocks.

The mood is negative enough that some sort of rebound action could occur, but with this extremely high level of uncertainty, a bounce cannot last. Focus on defense, and don’t rush to put cash to work.

At the time of publication, Rev Shark had no positions in any securities mentioned.