Pullback Picks Up Steam
It only took two days to know if what we saw on Tuesday was a low or the bottom. Frankly, it really can’t count as either. Since the S&P 500’s all-time high last Wednesday, every single day has seen stocks close lower than where they opened. You can see this in red on the right side of the chart. And most days, they have closed near the low of the day. No one can argue that someone or something has strong pressure on the market in the afternoon into the close.
Since last Wednesday’s new high, the major indices are down roughly 5-7%. Having already heard that the bull market is over, I will say that bull markets do not end like this, with a new high and then straight down move. Downside velocity like we have seen in the last week usually results in a low much sooner than later. Behavior we are seeing today typically happens during corrective phases which where I think the markets are now.
As I mentioned on Wednesday, my thesis was that this bout of weakness was not the 10%+ correction I was looking for. Rather, I thought the decline would be mid-single digits and then a rally followed by that larger decline. My thesis only holds if the stock market bottoms sooner than later without much more price damage. If I am wrong which certainly does happen here and there, I will asses and evaluate.
On Wednesday we bought AIOT and more KSPY. We sold TQQQ, SSO and some MQQQ. On Thursday we sold KRE, CROX, some XLB, some TGNA, some V and some COST.
