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A roughly 6-sigma October rout in the market's biggest winners has JPMorgan calling capitulation and telling clients to buy
Tue 10 Nov 2026 · 11:31 EST · 2 min read
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The stocks that carried the market for months just had their worst month in four decades. JPMorgan’s head of global markets strategy, Dubravko Lakos-Bujas, says the long momentum portfolio trailed the broader market by 11% in October.
That works out to roughly a 6-sigma move. It is also the worst single month in a data series that goes back to 1985.
What actually happened in October
Lakos-Bujas laid out the numbers in JPMorgan’s latest Global Equity Strategy note. The research behind the note ties the slide mainly to a fast sell-off in AI-related stocks.
Two worries drove it: doubts about whether massive capital spending on AI will pay off, and tighter liquidity. Hedge funds didn’t wait around for answers. They dumped global tech stocks at a pace of net selling not seen since 2016.
The Nasdaq 100 posted its biggest single-day drop since the pandemic during October. It finished the month approximately 5.3% lower.
JPMorgan’s deleveraging metrics also snapped back to levels last seen around “Liberation Day.”
Why JPMorgan is saying buy
Rather than calling time on the AI trade, JPMorgan argues investors have largely capitulated and advises clients to buy.
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JPMorgan frames October as an intra-cycle deleveraging reset inside the AI supercycle, not the end of it.
The Relative Strength Index on the Invesco QQQ, a popular Nasdaq 100 tracking fund, dropped below 30. RSI is a gauge of how hard and fast prices have moved. A reading below 30 is the traditional line for “oversold.”
According to the research, major cloud providers kept their AI capital expenditure trends robust even as their stock prices wobbled.
Not everyone at JPMorgan sees a quick bounce
Other JPMorgan strategists had previously flagged that the potential for a fast market rebound looked limited. Their reasons were practical: retail buying had weakened, and corporate buybacks had slowed.
Outside JPMorgan, some market participants have remained optimistic on AI, interpreting the October slump as a necessary adjustment rather than evidence that the underlying story broke.
What this means for investors
The record hedge fund selling and the reset in deleveraging metrics both point to a lot of leverage coming out of the system in a short window.
The bull case depends on cloud providers continuing to spend, and that spending eventually showing up as revenue for the companies supplying the chips, servers and software.
JPMorgan’s own strategists have pointed to weaker retail flows and slower buybacks as headwinds.
Disclosure: This article was edited by John Chen. For more information on how we create and review content, see our Editorial Policy.
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