by Jason Bodner
August 4, 2026
Over five-years ago, in March 2021, a single fund nearly took down Wall Street. Archegos Capital Management, run by Bill Hwang, quietly borrowed billions from major banks to build hugely concentrated positions in a handful of stocks. When those stocks started falling, banks called for more collateral. Hwang couldn’t deliver. Forced selling wiped out roughly $100 billion in market value in days.
Credit Suisse alone lost $5.5 billion. Nobody outside a small circle even knew Archegos existed until it was already over. The stocks weren’t bad businesses. They just had the wrong owner at the wrong time.
That story matters because we just watched a remarkably similar movie. From the March low to the June peak, the S&P 500 gained over 15% and NASDAQ surged over 30%. Middle East peace hopes, the SpaceX IPO and AI enthusiasm created one of the strongest sprints in recent memory. Margin debt climbed to a record $1.5 trillion in June, up 49% in a year. The rocket-ride up felt very different on the way down.
Here’s the question most investors are asking: If the businesses haven’t changed, who is doing the selling?
We now have a specific answer. Leopold Aschenbrenner, a former AI researcher, launched a hedge fund with a peak exposure of $45 billion. He was heavily long AI infrastructure stocks and short software names. When both legs of that trade went wrong simultaneously – as AI names fell while software recovered – the margin calls came. The fund liquidated its entire public equity portfolio to meet them.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
When you’re managing $45 billion, you’re not selling $5,000-retail positions. You’re liquidating hundreds of millions of dollars per stock. Every sale triggers more selling. High-frequency algorithms notice any softening bids, and spreads widen as buyers step back. The cascade doesn’t stop verify whether the underlying businesses are growing. It just needs cash to cover the position before the closing bell rings.
Google’s reported earnings last week were well above expectations. They announced $200 billion in AI capital spending, but the stock fell anyway. That is not the market making a judgment about these businesses. That is someone who needed some liquidity selling whatever they could sell.
Then the selling stopped. South Korea’s KOSPI index rallied 17.9% overnight – that’s an entire country’s stock market, not a single stock. That’s what happens when forced sellers exhaust themselves and short sellers scramble to cover.
The squeeze came. AI names which were then under pressure for weeks surged by double-digits in a single session. Friday’s NASDAQ gained 2.8% on one of the strongest inflow days of the year. Forced selling, it turns out, often precedes forced buying. The exits are always crowded in both directions.
Our data captured the extreme of the selling in real time. On July 29, technology saw 55-discrete outflows in a single session – the largest single day of technology outflows since February.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Since 2014, there have been 66-prior instances of that signal. What has historically followed those moments is not more selling. It is recovery. The technology sector ETF has averaged gains of 3.5% the following month, 11.9% over three-months, 17.8% over six-months, 27.8% over 12-months, and 64.2% over 24-months. The two-year win rate is 100%. Extreme outflows in technology have consistently marked opportunity, not the beginning of something worse.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Today’s Earnings Reality – And the Leading Sectors
Lost entirely in this volatility is what corporate America is actually reporting. More than half of S&P 500 companies have now reported second-quarter earnings, with a blended net growth rate of 39.3%. Eighty-six percent have beaten earnings estimates against a ten-year average of 76%. Eighty-percent have beaten revenue estimates against a ten-year average of 70%. Companies are reporting record earnings while the stocks attached to those businesses trade as if something broke. Nothing broke – except the leverage.
The rotation this week was the clearest signals yet that forced selling is sector-specific, not market-wide. Tuesday July 28 produced one of the strongest single-day inflow readings in recent weeks — 222-inflows against 92-outflows, the strongest day since early May. What was bought tells the story.
Restaurants, travel, fitness, auto-manufacturers, medical-device-makers, and large-cap pharma all attracted buying. Discretionary posted its strongest weekly reading in months. Healthcare extended its streak to seven-consecutive weeks of net inflows, rotating from biotech into large-cap medical devices and diagnostics. Financials held steady. Enterprise software attracted buyers within technology even as semiconductor names saw outflows. When the consumer, healthcare, and financials all accumulate in the same week chips get sold, the message is one of rotation, not retreat.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Our nine-midterm-year study (1990 to 2022) still points in the same destination – 100% positive at nine and 12-months from late July, averaging 10.6% and 12.8%, respectively. August and September remain a caution zone, but the election in November is the clearing event. The fourth-quarter of midterm years has averaged 7% gains with an 88% positive return rate in the 25-midterm elections we’ve seen since 1926.
When the pilot turns on the seatbelt sign, that doesn’t mean the plane is going down. It means there will likely be some turbulence between here and the destination – but the destination hasn’t changed.
As Fridtjof Nansen wrote, “Never stop because you are afraid. You are never so likely to be wrong.”
All content above represents the opinion of Jason Bodner of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
Powerful Earnings Could Override the August “Doldrums”
Income Mail by Bryan Perry
Lowering Leverage Before Leverage Runs Riot…Again
Growth Mail by Gary Alexander
The Worst Midterm Election Reversals – Often Spark the Sharpest Market Recoveries
Global Mail by Ivan Martchev
When Bonds Revolt Against the Fed
Sector Spotlight by Jason Bodner
When Big Bets Explode – On High Leverage – Disaster Often Follows
View Full Archive
Read Past Issues Here
Jason Bodner
MARKETMAIL EDITOR FOR SECTOR SPOTLIGHT
Jason Bodner writes Sector Spotlight in the weekly Marketmail publication and has authored several white papers for the company. He is also Co-Founder of Macro Analytics for Professionals which produces proprietary equity accumulation and distribution research for its clients. Previously, Mr. Bodner served as Director of European Equity Derivatives for Cantor Fitzgerald Europe in London, then moved to the role of Head of Equity Derivatives North America for the same company in New York. He also served as S.V.P. Equity Derivatives for Jefferies, LLC. He received a B.S. in business administration in 1996, with honors, from Skidmore College as a member of the Periclean Honors Society. All content of “Sector Spotlight” represents the opinion of Jason Bodner
Important Disclosures:
Jason Bodner is a co-founder and co-owner of Mapsignals. Mr. Bodner is an independent contractor who is occasionally hired by Navellier & Associates to write an article and or provide opinions for possible use in articles that appear in Navellier & Associates weekly Market Mail. Mr. Bodner is not employed or affiliated with Louis Navellier, Navellier & Associates, Inc., or any other Navellier owned entity. The opinions and statements made here are those of Mr. Bodner and not necessarily those of any other persons or entities. This is not an endorsement, or solicitation or testimonial or investment advice regarding the BMI Index or any statements or recommendations or analysis in the article or the BMI Index or Mapsignals or its products or strategies.
Although information in these reports has been obtained from and is based upon sources that Navellier believes to be reliable, Navellier does not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute Navellier’s judgment as of the date the report was created and are subject to change without notice. These reports are for informational purposes only and are not a solicitation for the purchase or sale of a security. Any decision to purchase securities mentioned in these reports must take into account existing public information on such securities or any registered prospectus.To the extent permitted by law, neither Navellier & Associates, Inc., nor any of its affiliates, agents, or service providers assumes any liability or responsibility nor owes any duty of care for any consequences of any person acting or refraining to act in reliance on the information contained in this communication or for any decision based on it.
Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any securities recommendations made by Navellier. in the future will be profitable or equal the performance of securities made in this report. Dividend payments are not guaranteed. The amount of a dividend payment, if any, can vary over time and issuers may reduce dividends paid on securities in the event of a recession or adverse event affecting a specific industry or issuer.
None of the stock information, data, and company information presented herein constitutes a recommendation by Navellier or a solicitation to buy or sell any securities. Any specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. The holdings identified do not represent all of the securities purchased, sold, or recommended for advisory clients and the reader should not assume that investments in the securities identified and discussed were or will be profitable.
Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. Individual stocks presented may not be suitable for every investor. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. Investment in fixed income securities has the potential for the investment return and principal value of an investment to fluctuate so that an investor’s holdings, when redeemed, may be worth less than their original cost.
One cannot invest directly in an index. Index is unmanaged and index performance does not reflect deduction of fees, expenses, or taxes. Presentation of Index data does not reflect a belief by Navellier that any stock index constitutes an investment alternative to any Navellier equity strategy or is necessarily comparable to such strategies. Among the most important differences between the Indices and Navellier strategies are that the Navellier equity strategies may (1) incur material management fees, (2) concentrate its investments in relatively few stocks, industries, or sectors, (3) have significantly greater trading activity and related costs, and (4) be significantly more or less volatile than the Indices.
ETF Risk: We may invest in exchange traded funds (“ETFs”) and some of our investment strategies are generally fully invested in ETFs. Like traditional mutual funds, ETFs charge asset-based fees, but they generally do not charge initial sales charges or redemption fees and investors typically pay only customary brokerage fees to buy and sell ETF shares. The fees and costs charged by ETFs held in client accounts will not be deducted from the compensation the client pays Navellier. ETF prices can fluctuate up or down, and a client account could lose money investing in an ETF if the prices of the securities owned by the ETF go down. ETFs are subject to additional risks:
- ETF shares may trade above or below their net asset value;
- An active trading market for an ETF’s shares may not develop or be maintained;
- The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track;
- The cost of owning shares of the ETF may exceed those a client would incur by directly investing in the underlying securities and;
- Trading of an ETF’s shares may be halted if the listing exchange’s officials deem it appropriate, the shares are delisted from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally.
Grader Disclosures: Investment in equity strategies involves substantial risk and has the potential for partial or complete loss of funds invested. The sample portfolio and any accompanying charts are for informational purposes only and are not to be construed as a solicitation to buy or sell any financial instrument and should not be relied upon as the sole factor in an investment making decision. As a matter of normal and important disclosures to you, as a potential investor, please consider the following: The performance presented is not based on any actual securities trading, portfolio, or accounts, and the reported performance of the A, B, C, D, and F portfolios (collectively the “model portfolios”) should be considered mere “paper” or pro forma performance results based on Navellier’s research.
Investors evaluating any of Navellier & Associates, Inc.’s, (or its affiliates’) Investment Products must not use any information presented here, including the performance figures of the model portfolios, in their evaluation of any Navellier Investment Products. Navellier Investment Products include the firm’s mutual funds and managed accounts. The model portfolios, charts, and other information presented do not represent actual funded trades and are not actual funded portfolios. There are material differences between Navellier Investment Products’ portfolios and the model portfolios, research, and performance figures presented here. The model portfolios and the research results (1) may contain stocks or ETFs that are illiquid and difficult to trade; (2) may contain stock or ETF holdings materially different from actual funded Navellier Investment Product portfolios; (3) include the reinvestment of all dividends and other earnings, estimated trading costs, commissions, or management fees; and, (4) may not reflect prices obtained in an actual funded Navellier Investment Product portfolio. For these and other reasons, the reported performances of model portfolios do not reflect the performance results of Navellier’s actually funded and traded Investment Products. In most cases, Navellier’s Investment Products have materially lower performance results than the performances of the model portfolios presented.
This report contains statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are “forward-looking statements” within the meaning of The U.S. Private Securities Litigation Reform Act of 1995. These statements may be identified by such forward-looking terminology as “expect,” “estimate,” “plan,” “intend,” “believe,” “anticipate,” “may,” “will,” “should,” “could,” “continue,” “project,” or similar statements or variations of such terms. Our forward-looking statements are based on a series of expectations, assumptions, and projections, are not guarantees of future results or performance, and involve substantial risks and uncertainty as described in Form ADV Part 2A of our filing with the Securities and Exchange Commission (SEC), which is available at www.adviserinfo.sec.gov or by requesting a copy by emailing info@navellier.com. All of our forward-looking statements are as of the date of this report only. We can give no assurance that such expectations or forward-looking statements will prove to be correct. Actual results may differ materially. You are urged to carefully consider all such factors.
FEDERAL TAX ADVICE DISCLAIMER: As required by U.S. Treasury Regulations, you are informed that, to the extent this presentation includes any federal tax advice, the presentation is not written by Navellier to be used, and cannot be used, for the purpose of avoiding federal tax penalties. Navellier does not advise on any income tax requirements or issues. Use of any information presented by Navellier is for general information only and does not represent tax advice either express or implied. You are encouraged to seek professional tax advice for income tax questions and assistance.
IMPORTANT NEWSLETTER DISCLOSURE:The hypothetical performance results for investment newsletters that are authored or edited by Louis Navellier, including Louis Navellier’s Growth Investor, Louis Navellier’s Breakthrough Stocks, Louis Navellier’s Accelerated Profits, and Louis Navellier’s Platinum Club, are not based on any actual securities trading, portfolio, or accounts, and the newsletters’ reported hypothetical performances should be considered mere “paper” or proforma hypothetical performance results and are not actual performance of real world trades. Navellier & Associates, Inc. does not have any relation to or affiliation with the owner of these newsletters. There are material differences between Navellier Investment Products’ portfolios and the InvestorPlace Media, LLC newsletter portfolios authored by Louis Navellier. The InvestorPlace Media, LLC newsletters contain hypothetical performance that do not include transaction costs, advisory fees, or other fees a client might incur if actual investments and trades were being made by an investor. As a result, newsletter performance should not be used to evaluate Navellier Investment services which are separate and different from the newsletters. The owner of the newsletters is InvestorPlace Media, LLC and any questions concerning the newsletters, including any newsletter advertising or hypothetical Newsletter performance claims, (which are calculated solely by Investor Place Media and not Navellier) should be referred to InvestorPlace Media, LLC at (800) 718-8289.
Please note that Navellier & Associates and the Navellier Private Client Group are managed completely independent of the newsletters owned and published by InvestorPlace Media, LLC and written and edited by Louis Navellier, and investment performance of the newsletters should in no way be considered indicative of potential future investment performance for any Navellier & Associates separately managed account portfolio. Potential investors should consult with their financial advisor before investing in any Navellier Investment Product.
Navellier claims compliance with Global Investment Performance Standards (GIPS). To receive a complete list and descriptions of Navellier’s composites and/or a presentation that adheres to the GIPS standards, please contact Navellier or click here. It should not be assumed that any securities recommendations made by Navellier & Associates, Inc. in the future will be profitable or equal the performance of securities made in this report.
FactSet Disclosure: Navellier does not independently calculate the statistical information included in the attached report. The calculation and the information are provided by FactSet, a company not related to Navellier. Although information contained in the report has been obtained from FactSet and is based on sources Navellier believes to be reliable, Navellier does not guarantee its accuracy, and it may be incomplete or condensed. The report and the related FactSet sourced information are provided on an “as is” basis. The user assumes the entire risk of any use made of this information. Investors should consider the report as only a single factor in making their investment decision. The report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. FactSet sourced information is the exclusive property of FactSet. Without prior written permission of FactSet, this information may not be reproduced, disseminated or used to create any financial products. All indices are unmanaged and performance of the indices include reinvestment of dividends and interest income, unless otherwise noted, are not illustrative of any particular investment and an investment cannot be made in any index. Past performance is no guarantee of future results.