The market was stunned by a very poor earnings report from Meta Platforms (FB) . The poor response to the report dragged down the entire market on terrible breadth of 1,360 advancers to 6,900 decliners. The Nasdaq 100 ETF (QQQ) was hit particularly hard with a loss of 4%. A big part of that was driven by Amazon (AMZN) , which lost 8% in the regular session.
Market players were very fearful that Amazon would confirm the gloomy report from Facebook and sell it all day.
The sellers were proved wrong. Amazon put up a good report and issued upbeat guidance, and the stock is now up 16% after hours. Instead of an 8% loss, the stock is now sitting on an 8% gain.
There really isn't any way to logically trade this action. What makes it much harder is that the volatility in these big-cap names causes sympathy moves in thousands of other stocks that are traded in big baskets by computer algorithms and ETFs. There really was no reason for a cannabis exchange-traded fund like AdvisorShares Pure US Cannabis ETF (MSOS) to trade down Thursday, thanks to Meta, and there is no real reason for it to bounce on earnings from Amazon, but that is what is happening.
The good news is that the gloom and despair that was so thick during the day's session has lifted for now, and we may see more focus on some stock picking, as market players reflect on some of the wildly random action we had Thursday.
This is an extremely difficult market, but the emotions and lack of rationality will create some mispricing and good opportunities.
Have a good evening. I'll see you tomorrow.