It wasn’t Black Monday, but it wasn't pleasant.

After being in the ‘greed’ zone last Wednesday, the market swiftly swung to ‘extreme fear.’  However, I do not sense ‘fear’ among investors, and I suspect a lot of the selling is from those fancy trading arrangements that produced easy money for a long time.

The unwinding, like the windup, is not based on fundamentals, as much as financial leverage.

Undoubtedly, more sessions like Friday and Monday will see more folks race for the exits, but investors are a lot smarter than they have been. That said, this has been an emotional roller coaster.

Nowhere to Hide

Every sector finished in the red, and the three growth sectors brought up the red.

The heat map from yesterday’s session looks like the topography of Mars.

Market Breadth

Large-cap value suffered the least, but that wouldn’t qualify as a pyrrhic victory. There were no winners.

Blue Chips No Safe Harbor

There were only 181 advancers vs. 2.677 decliners on the New York Stock Exchange (NYSE). New lows swamped new highs, and the down volume was ten times the up volume on the NYSE.

Market Breadth	NYSE	NASDAQ
Advancers	181	574
Decliners	2,677	3,765
New Highs	41	88
New Lows	220	588
Up Volume	280.99 million	1.25 billion
Down Volume	3.94 billion	4.67 billion

If you know anyone at the Fed, let them see that the stock market is trying to get their attention.

Today’s Session

A key characteristic of the 2024 stock market has been the agility of the herd. Everyone piled into a handful of stocks, mocking the Greater Fool Theory.

One of the most striking developments of the 2024 stock market has been the rapid transition from cyclicals to defenses, following a record pivot into small caps from the Magnificent Seven.

But the main characteristic has been the 2024 rally cry to ‘Buy the Dip” or “BTD.” Certainly, buying 5% pullbacks has proven to be a great strategy.

If the market returns to rally mode, would it be wise to return to mega-cap names, which have become less expensive?

I think the answer generally is yes, but these are all separate companies not a single entity.  Which stands to reason some are more attractive than others.

Right now the market is looking for stability.

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