• 1,217 days Will The ECB Continue To Hike Rates?
  • 1,217 days Forbes: Aramco Remains Largest Company In The Middle East
  • 1,219 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,619 days Could Crypto Overtake Traditional Investment?
  • 1,624 days Americans Still Quitting Jobs At Record Pace
  • 1,626 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,629 days Is The Dollar Too Strong?
  • 1,629 days Big Tech Disappoints Investors on Earnings Calls
  • 1,630 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,632 days China Is Quietly Trying To Distance Itself From Russia
  • 1,632 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,636 days Crypto Investors Won Big In 2021
  • 1,636 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,637 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,639 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,640 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,643 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,644 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,644 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,646 days Are NFTs About To Take Over Gaming?
  1. Home
  2. Markets
  3. Other

Whole Lotta Bear Markets Goin' On

The Dow and S&P 500 have fallen by around 10% since August, which in normal times would be hardly worth mentioning. But below the surface, in what used to be the market's hottest sectors, much more serious damage is taking place.

Biotech, which had an epic bull market during the era of QE and the Affordable Care Act, had begun to crater even before Hillary Clinton proposed price controls for pharmaceuticals. Last week it went straight down.

IBB Daily Chart

Solar stocks had a quiet bull market that accompanied the technology's emergence as heir apparent to fossil fuels. But now they're quietly crashing:

TAN daily Chart

Junk bonds, which are essentially the equities of highly-leverage companies (because they turn back into equity when the bonds default and reluctant creditors are forced to take ownership of the junk issuers) have tanked in the past few months and are now far below their 50 and 200-day moving averages.

HYG Daily Chart

One group that isn't plunging is the gold miners. But that's mainly because they had their crash while everything else was still rising, and are now at historically cheap levels. Here's an ETF that tracks the junior gold mining stocks:

GDXJ Daily Chart

What does it mean when several high-flying sectors crash all at once? If history is still a reliable guide (a big if in today's manipulated world) it means the internal structure of the market is deteriorating much more quickly than the behavior of the Dow and S&P 500 seem to imply.

When stocks in general catch up to the carnage in yesterday's hot sectors, we'll get something a lot more extreme than a simple correction. And when that happens the odds of the Fed raising US interest rates drop to zero.

 

Back to homepage

Leave a comment

Leave a comment