Markets are made of the constant struggle between fear and greed. While fear is in the ascendant at the moment, the operational performance of high growth companies will be at levels that ultimately change the feelings of portfolio managers. Hedge funds are paid to invest and not to hold cash. And with the long bond yield backing down to just marginally above the inflation rate, holding cash is not a real alternative. At some point, holding low risk, low yield securities will give way, as it always has, to a thirst for better returns. At the moment, high growth names are seeing negative relative strength because that is where hedge funds have been going to raise capital, and thus that is the trade by quantitative funds who explicitly look for anomalies to trade against.
Markets are also mostly automated today. From a Christmas Day WSJ article:
“Behind the broad, swift market slide of 2018 is an underlying new reality: Roughly 85% of all trading is on autopilot—controlled by machines, models, or passive investing formulas, creating an unprecedented trading herd that moves in unison and is blazingly fast.”
This mindless automated selling is creating bargains in good companies.