Pitching the Tent

The market turn is officially picking up speed, and the screen is bleeding red. But if you step back and look at the macro data, this is completely normal, healthy market action.

This short article won’t take into account the Iran war, which could force the market to correct deeper and faster. As I write this, rumors are circulating that America may bomb Iran tonight.

Let’s focus on the data.

We are in the opening chapters of a classic mid-term cycle correction.

This is the natural way markets clean out the hype, reset the charts, and prepare for the next real leg higher. I believe we have begun pitching this tent and that the ultimate bottom arrives sometime around October.

The Current Scorecard (Off the Highs):

Semiconductors ($SMH): -11.18%

Nasdaq ($QQQ): -7.34%

S&P 500 ($SPY): -4.60%

Dow Jones ($DIA): -3.38%

What Does a Healthy Correction Look Like?

Markets cannot go up in a straight line forever. No, this time is not different.

A normal, non-recessionary reset typically falls within a predictable range:

$SPY: A decline of 10% to 14%, targeting roughly $665-$670

$QQQ: A decline of 13% to 18%, projecting a target near $635

$SMH: The overheated semiconductor sector typically sees declines of 18% to 25%, targeting support near $500

The Timeline

A real mid-cycle washout is a process, not a single-day event.

Historically, these corrections take three to four months to fully burn through the excesses and establish a durable bottom.

Since the cracks are only now beginning to show in June, I expect a volatile summer filled with sharp rallies, relief bounces, and plenty of traps designed to pull investors back in too early.

The underlying path still points lower until the system is flushed clean, with a potential final bottom forming somewhere in the September-to-October window.

Patience wins.

Let the market reset. Collect your yield. Preserve your capital. Buy real value when it returns.

Over the past 30 years of trading and investing, I’ve learned the importance of letting trades and investments come to me.

That approach isn’t for everyone, but it has worked extremely well for me.

I firmly believe we remain in a major bull cycle and that from 2027 through 2029 we will see all-time highs that most people cannot even imagine today.

But first, we need a healthy correction.

So I let the trade come to me.

Many of you who follow me on X know this isn’t the first time I’ve taken this approach, and it certainly won’t be the last.

I opened my puts one day early, but they are already deeply profitable, with some positions up more than 50%.

Shorting this has been a very easy trade so far, and I have no complaints.

And we haven’t even discussed inflation.

We haven’t discussed what happens if oil spikes.

We haven’t discussed what happens if the Federal Reserve is forced to abandon the rate-cut narrative and keep policy tighter for longer.

There is simply no reason for me to be aggressively long this market right now.

Outside of custodial accounts for my children, I have largely been sitting in cash and selectively shorting.

Making money on a short position feels great.

But calculating how much money you saved by protecting profits from positions that had already made large gains is even better.

The first rule of investing is making money.

The second rule is keeping it.