The market is allowed to trade lower every once in awhile. There is nothing harsh or unusual about stocks trading down after a big leg up. The rotation out of tech and into basic materials is happening and there’s nothing wrong with that either. Barring a complete melt down, which is highly unlikely to occur in the month of December, the bulls have won the battle for 2016 — holding firm in a year wrought with uncertainty.
My bubble Basket, domisciled in Exodus, has broken down. I update this portfolio every 6 months with what I interpret to be the highest valuation stocks. After a harmonious lift post election, they’re finally heading lower again — off by more than 2% today.
Tech stocks are getting shredded and breadth stands at about 38%. The very worst performers could be found in the semis.
It’s very odd to see such a divergence between the Dow and the Nasdaq, but not entirely unpresecedented. For me, the much bigger picture is the rapid ascent of rates and the dollar. Eventually, they will crush corporate earnings of exporters. But the market only seems to care about momentum, especially after a long year of bitter partisan politics. It is not, however, factoring in the fundamentals. Then again, the market hasn’t truly factored in fundamentals in years.
People only seem interested in the facts when things go wrong.
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