Yesterday was an ugly session, with Consumer Discretionary (XLY) stocks weighing down the session, and huge drawdowns on heretofore sizzling stocks.

Big Boys Stumble

According to Tier 1 Alpha, 50% of the downside momentum came from just ten stocks.

The Roundhill Big Tech ETF (MAGS) is holding up well with the rough week.

Big Test Coming

The S&P 500 (SPX) remains above the 50-day moving average, which has been in place for one of the most extended periods on record. I should note that closing below this metric is not a “sell signal,” but holding and finding traction could be a signal to would-be buyers.

We slipped back into ‘extreme fear,’ which means near-term pain, but it is also most often associated with the forming of near-term bottoms.

Market Breadth

Market Breadth was underwater across the board, but there were still pockets of green.

Market Breadth	NYSE	NASDAQ
Advancers	935	1,269
Decliners	1,806	3,401
New Highs	93	103
New Lows	137	297
Up Volume	2.32 billion	4.14 billion
Down Volume	3.5 billion	6.74 billion

No place to hide.

I continue to be mystified by the relentless pounding in small-cap names.

It would be impressive if the buy-on-dips crowd made their move on a Friday, but they will make their move soon. Most of the selling is letting off steam on stocks that have enjoyed mind-boggling rallies.

Today’s Session

Momentum angst and downside bias are dictating the market this morning, as reflected in the rise in the VIX (fear index). 

All eyes are on the Fed, which is hiding in a bunker, and the government shutdown now has the attention of the stock market, with airline delays and canceled flights that have an economic and morale impact. 

 

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