Finally, the major indices are showing some sign of weakness, and people want to know what is going on?
There is more to the market than the S&P 500 and the Nasdaq.
Both indices masked the carnage in most individual stocks that started in February 2021.
Individual stocks and new YOLO traders have gone from euphoria to desperation in one year.
Five stocks drive 50% of the Nasdaq 100; those same stocks amount to 26% of the S&P 500.
Those stocks held up the “indices” while everything was cratering.
The Dow Jones is an outdated index of 30 stocks, and the high price stocks dominate the index. In other words, United Health ($460.99) is the most crucial stock in that index. Can you believe that?
I first wrote about the divergences and discrepancy on 11/25. Here is the link; Holy Bejeezus
Then again, on 12/2, “This Tweet Went Viral.”
I touched base on it one more time here on 12/18; “Everyone wants to know what the hell is going on”?
So what has changed from those 3-posts?
The seven anointed stocks have finally come under pressure and are now weighing on the indices. ; FAATMAN–FACEBOOK, APPLE, AMZN, TSLA, MICROSOFT, ALPHABET, NVIDIA.
The home-gamer is finally taking notice because he sees the Dow and the S&P 500 down once he puts on CNBC.
Here is a chart from December when everything was considered fine because the FAATMAN were printing highs every day.”
The chart shows the weakness outside of the Seven anointed stocks.
From Bespoke;
Bottom line; we have sidestepped most of the damage in individual stocks. And we have been able to bypass most of the recent weakness in the indices by being heavy in cash and having some shorts in place.
The market is going to market.
It will go up AND down, not up OR down.
The massacre in some ETFs like ARKK down -50% and stocks like DOCU -60% in the last four months, PTON -80%, reiterates the value of stops.
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