Take an honest look at the market

For the third day in a row, we saw a brutal sell-off in the broad market, while the top indicators covered the chaos. Monday’s breadth wasn’t bad, but certain areas of the market were slaughtered.

The ARK Innovation ETF is down 4%, the IBD 50 ETF (fifty) with a loss of 4.8%, and selected small companies went without bids and fell into the abyss. The S&P 500 has held up fairly well most of the day but has sold very sharply in the last 45 minutes of trading.

I have been debating the two-tiered nature of this market for a while, but it has reached extreme levels in the past few days. A good example of this is that there were 177 stocks that rose 4% on the day, but nearly 400 stocks that fell 4% or more.

The good news is that the market is going through a very deep correction in some places. The bad news is that very few people don’t see it, and that makes the feelings more positive than they should be. A market correction usually sees a very correlated sell off. There is a lot of selling in this case, but it is not reflected in a traditional way.

This is one of the strangest market moves I can remember, due to the sheer number of stocks on dips or crashes while the indices hardly react.

The big question is how will this eventually resolve itself? At this point, I have no idea and will just have to be patient and see what happens next. There are a lot of “good” stocks being sold due to this spin, but there are no signs yet that they are close to bottoming.

I wish you a good evening. see you tomorrow.

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