I don’t know if there’s definitely going to be a crash, but all the signs point to it.
The problem is, we have so many newbies who don’t know market history.
They don’t think it can happen…
They might remember the COVID crash from March 2020 (but they also remember how fast it bounced).
They have no experience of an extended market crash.
For them, it’s always…
“Buy the dip!”
That way of thinking brings up one of the most important lessons you can ever learn: In an uncertain market, err on the side of caution.
This market is a chopfest.
Yesterday, markets rallied after the midterm elections.
But last week we saw several Big Tech companies report earnings, only to get crushed by Wall Street.
Alphabet (GOOGL) reported and it dropped 13% and kept going…
Source: Stocks To Trade
GOOGL 10/28/26-10/30/26, 1-min candles.
Amazon (AMZN) reported and dropped 12%. It bounced but is still down…
Source: Stocks To Trade
AMZN 10/28/26-10/30/26, 1-min candles.
The one that caught everyone by surprise was Intel (INTC). It dropped 28% overnight.
By Friday’s close, it was down even more…
Source: Stocks To Trade
INTC 10/29/26-10/30/26, 1-min candles.
The tech selloff dragged the Nasdaq lower by 2% for the week.
Source: Stocks To Trade
QQQ, 5-day, 1-min candles.
Again, I can’t predict whether a crash is coming.
But I do know that a lot of stocks are WAY overvalued.
If a crash does come, is it a good thing?
Here’s my take on why the next market crash could be a good thing…
I hope yesterday’s rally keeps up and the overall market keeps going. And I hope the AI revolution keeps going.
But at the same time, you have to look at the big picture.
Looking at it historically, everything is expensive.
That said, there are also reasons why a stock market crash would be good…
3 Benefits of a Market Crash
A full-blown stock market crash would scare a lot of people.
You could make an argument that a healthy pullback and consolidation would be better.
But a crash in an overextended market has benefits (especially for day traders).
First, it would…
Crash Benefit No. 1: Flush Out Speculation from Overvalued Stocks
A market crash exposes overvalued companies and over-leveraged speculators.
“Only when the tide goes out do you discover who’s been swimming naked.” – Warren Buffett
As small stock traders, we’re used to the hype and speculation, right?
But some BIG companies and big traders have ridden hype a long way over the past couple of years.
That has led to newbies thinking stocks only go up.
A crash would reset valuations to more realistic levels. In other words, it wouldn’t take crazy math to make the valuations work.
Crash Benefit No. 2: Creates Buying Opportunities
When there’s a huge sell-off, it creates great buying opportunities.
I’m not suggesting that you try to day trade INTC or GOOGL with a small account.
But there are always plays.
For example, even in an ugly market on Friday, we had a play with AI OKTO Corp (AIOK)…
Source: Stocks To Trade
AIOK, beautiful squeeze on a recent runner, 1-min candles.
Take advantage of the opportunities.
So many people are just HODLing — holding on for dear life — overleveraged positions. If the crash comes, they’ll start panic selling.
If you sit on the sidelines and wait for opportunities, you have an edge. In the meantime, trade what’s moving.
Finally…
Crash Benefit No. 3: A Stock Market Crash Is Healthy
Frankly, I’m surprised that we haven’t had a market crash in a while. We’re overdue.
The reason valuations get so out of whack is due to speculation and excessive leverage.
For the past few years, it has paid to HODL most tech stocks. But in the long run, HODLing can be very dangerous.
A crash would wipe out a lot of newbies and HODLers. And it would be painful for some VERY big traders using leverage.
But it would also mean that strong companies with real revenue could lead the way back.
That’s how we get to new highs that are sustainable.
Crash, Post-Midterm Rally, New 2027 Opportunities — Be Ready
Remember, the S&P 500 has risen in 19 post-midterm election years since 1950. If history rhymes, then we could see a big market rally in 2027.
All the more reason to stay safe now, right? That way you can take advantage of any potential bounce.
We’re due some consolidation. That’s always been good for the market in the long run.
I’m sure most of the “real” companies building out AI will be fine. The technology will be fine.
And, yes, the economy will be fine over time.
Understand that even if a big crash does happen, there will be opportunities in the market.
Remember, preparation is key.
Are you prepared for what happens today, tomorrow, and next week? If so, let me know here.
Cheers,
Tim Sykes
Editor, Tim Sykes Daily
