Breakdown City

It’s an understatement to say that this market has been tough. An analogy I’ve been using for the past couple months: Trading this market is like snowboarding a double-black diamond hill.

The warnings for a messy market were certainly there. A month ago, I wrote a post: “Potential inflection point nearing.” I listed divergences, sentiment, and seasonality as reasons to be cautious.

The tweet below captures all the main divergences: basically, money has been flowing out from speculative areas (junk bonds, small caps, emerging markets) and into quality (large-cap developed market stocks, treasury bonds and gold).

Charts that looked promising a couple weeks ago are breaking down hard. And it’s across all sectors: tech, bio, crypto, commodities, airlines, etc. Here’s a quick tour.

Tech/Growth

The first shoe to drop was in tech stocks. After an incredible run last year, there’s been some major 20-40% drawdowns in the space. Hardest hit have been clean tech (fuel cells) and SPACs.

Computer hardware was the last man standing in tech, it too took a turn this week.

Biotech

Crypto

Other Sectors

Here’s Boeing.

Just 2 days ago I wrote a post “Inflation trade continues.” I had high hopes for the red hot commodity sectors to continue higher, but here’s uranium miners breaking down.

So what’s one to do? I’m holding a boring portfolio and looking to spend time away from the screens.


Important DisclaimerThis blog is for educational purposes only. I am not a financial advisor and nothing I post is investment advice. The securities I discuss are considered highly risky so do your own due diligence.