OT Market breath

For those who follow market breath, meaning if more stocks are going down than going up, that it is a sign of a coming bear market, here are some bad statistics. Yesterday, on the Nasdaq, they were 781 new 52 week lows, and 38 52 week new highs. This has never happened before to this extent. On the NYSE, there were 312 52 lows, and 50 52 week highs. This only happened 3 times in history, the last time being 1999.

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The market sure has bad breath. :slight_smile:

But I’m sure you meant breadth.

Elan

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Yesterday, on the Nasdaq, they were 781 new 52 week lows, and 38 52 week new highs.
This has never happened before to this extent. On the NYSE, there were 312 52 lows, and 50 52 week highs.
This only happened 3 times in history, the last time being 1999.

Though breadth was indeed fairly poor, I’m not sure where you got your historical numbers.
Things are nowhere near previous record levels.
In March 2020 alone, on both NYSE and Nasdaq, there were at least 10 days that new highs were scarcer and at the same time new lows more common than any recent day.
My composite breath indicator has been more “bad” than this fully 13% of all days in the last 15 years.

What’s probably more concerning is that breadth was already pretty bad when the market index was hitting fresh highs lately.
That’s frequently a sign of trouble of the toppy kind…good performance has become more and more concentrated in fewer and fewer issues.
As each lifeboat gets overloaded and sinks, the survivors cram more and more tightly into the few remaining afloat.
But the last boat can’t hold everybody, so its prow also turns down.
That’s one of the few indicators that would have saved someone from the 1987 crash.

Jim

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In any event, that’s some bad breath!

Professor Talon

Yesterday, on the Nasdaq, they were 781 new 52 week lows, and 38 52 week new highs.
This has never happened before to this extent. On the NYSE, there were 312 52 lows, and 50 52 week highs.
This only happened 3 times in history, the last time being 1999.

Today 90 minutes after open

**Breadth** 
 **1/21/2022             High  Low   %High  %Low**
11:00:00 AM ET  Nasdaq    14  1054    -1%  -99%
11:00:00 AM ET  NYSE       4   355    -1%  -99%

GD_

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In case anybody cares, neither my major nor short-term bottom indicator is firing today.
It would take about 3 more days like this to trigger the short term one, or about 9 more days of this to trigger the major one.
Of course we never get that many days in a row without things getting either better or worse. Or both.

Jim

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In case anybody cares, neither my major nor short-term bottom indicator is firing today.

Meanwhile, the S&P crossed below its 200DMA today and the NAHL is the lowest since March 2020.

Elan

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In case anybody cares, neither my major nor short-term bottom indicator is firing today.

Meanwhile, the S&P crossed below its 200DMA today and the NAHL is the lowest since March 2020.

So…bad.
But not so bad it’s good?

Jim

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When the pandemic hit there was a move from real to virtual, and virtual prospered. The market might be seeing an end to the pandemic, and adjusting prices to reflect the move away from virtual. After the pandemic’s end, people will switch spending from on-line to travel and restaurants. Businesses will spend less on software needed to support remote work.

Stay-At-Home Stocks Plunge As Pandemic Trade Vanishes, January 21, 2021
https://www.barchart.com/story/news/7029227/stay-at-home-sto…

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Meanwhile, the S&P crossed below its 200DMA today

As did the 43 week SMA.
While the two GTT FRED signals are still disconfirming a recession.

The market went down so fast that I doubt this is the start of a bear market.
I bought 4 stocks today that I had put mental low limit buy orders on.
I’m just hoping that BRK.B drops to 300 so that buy order gets filled.

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Meanwhile, the S&P crossed below its 200DMA today

As did the 43 week SMA.
While the two GTT FRED signals are still disconfirming a recession.

The market went down so fast that I doubt this is the start of a bear market.

I don’t think a recession is on the horizon. The market is responding to the beginning of the end of free money. It’s a reversal of a secular trend of a decade or two, from falling to rising interest rates. The Fed could raise rates 1/4 point per quarter for the next five years without causing a recession, but it might be a really tough time for stock investing.

Elan

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The Fed could raise rates 1/4 point per quarter for the next five years without causing a recession, but it might be a really tough time for stock investing.

I moved a bit of money into a couple of Muni CEFs today. Turns out I’ve been more-or-less accidentally shifting money to a whole slew of various funds yielding in the 5% to 9% range.

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My little dashboard has gone to -7 pessimistic/bearish. While that’s near a bottom without the SMA slope and DBE firing on the S&P, the Russell / small caps are absolutely in a bear.

The first bottom signal started tentatively raising its hand Friday, at an extreme. Similar to but more simplistic than Mungo’s.

As has been said, the market has rolled over and dropped like an acrobat in an air show. This has the markings of another taper tantrum or the CV panic of Feb-March '20. “In the short run the market is a voting machine…” and the markets have voted heavily against Powell both tapering and raising interest rates at the same time.

The carnage in the hypergrowth tech world is truly astounding. Some names have gotten to 2000-01 levels of damage (after '99 levels of overbought), but it’s worse because it’s happened in what, 8 weeks? (e.g. Upstart).

FC

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The carnage in the hypergrowth tech world is truly astounding. Some names have gotten to 2000-01 levels of damage (after '99 levels of overbought), but it’s worse because it’s happened in what, 8 weeks? (e.g. Upstart).

FC

——

I dont disagree that it has been a brutal drop for growth stocks.

But why cant part of the answer be that they simply went up too much in 2020 and parts of 2021?

We had a pandemic.
And markets went overboard to the upside.

Almost like a shot of adrenaline on an injured person. You need to come down off that artificial high at some point, get healthy and reset.

Valaution expansion in growth kicked into gear in 2018, accelerated in 2019, and in Jan/Feb 2020 they were still elevated.

Covid crash was artificial, but while the initial drop was overkill, the subsequent rise made no sense. Cloud, ad tech, peleton, and how about ZM?

ZM was rich pre covid. A bit further and it will be back to pre covid prices, yet they are a $4b runrate vs barely doing $1b.

Maybe ZM was too high prior to covid, got way out of whack, and is starting to approach something rational via multiple contraction now.

I welcome these drops, because maybe the reset gets us back to fundamentals vs pure mommentum/meme/yolo/fomo nonsense.

Dreamer

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Dreamer, I don’t disagree. All we can do is watch the board; in submarines they call it the Christmas tree.

The fact of the market in recent years is the billions of dollars the Fed has pumped into it secondarily. With ZIRP, there’s been nowhere else for the Banks to put the money; so, Momo has become a permanent feature of the market.

Now that all that betting is unwinding - and a LOT of the money went into stoking the momentum fire - the institutional rush for the exits is (almost) as predictable as it is annoying; because many investors mistake the buy rush and momo for an increased permanent valuation. What it is is a place to generate returns until the party is deemed to be over, which has happened. It wasn’t about fundamentals on the way up (except at the beginning), and it’s not really about it now.

Most of these hypergrowers are only back to where they were last June to September - but the now-unwinding of the blowoff top in Q4 kills people that finally jumped in late.

None of those stocks can be valued properly on earnings because the low accounting earnings make the multiples ridiculous. It’s all revenue growth based.

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On Friday there were 8 NH & 526 NL on the S&P and 22 NH & 1323 NL on the NASDAQ.

Could this be forming a bottom?

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The carnage in the hypergrowth tech world is truly astounding. Some names have gotten to 2000-01 levels of damage (after '99 levels of overbought), but it’s worse because it’s happened in what, 8 weeks? (e.g. Upstart).

While Upstart has been slaughtered, it’s still a long way from reaching the total drop seen by speculative tech high-flyers in 2000-2001.

Updated from what I posted on the BRK board recently:

Saul stocks have dropped ~40% on average since November? That could happen again, again, again, again and AGAIN before they find bottom.

As Naj pointed out over at Sauls recently, Amazon went from 113 down to 5.5 from Dec. 1999 to Oct 2001, even while Amazon was executing their business expansion remarkably well during that time period.

UPST is almost through its 3rd 40% drop from its high of $390 back in November, closing at $93 Friday, while a price of $84 would complete the 3rd 40% drop, with 3 more to go before dropping as much as Amazon did.

Of the ‘Saul’ stocks I’ve superficially reviewed, Upstart looks the most interesting because they’re still in robust hyper-growth, have a huge market to address, and they are already showing net GAAP profit. I’m not buying it yet, but if does fall way further from here, I’ll probably pick some up.

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Individual stock losses of 90% happen. Cisco went from a $82 high to a $8 low (March 2000 to October 2002). Three MI posts near the October 9, 2002 US equity market bottom:

“I feel like Argentinian currency.” https://discussion.fool.com/a-dark-day-17968030.aspx
“I didn’t think it would happen to me” https://discussion.fool.com/quoti-thought-it-was-all-those-other…
“BIG, BIG gains with DELL and CSCO and others” https://discussion.fool.com/author-jansz-date-73002-number-13059…
“held Cisco at $82 and sold at $13” https://discussion.fool.com/in-2000-2001-after-the-dotcom39s-bur…

            VTI            VGT
year  Large Cap Blend  Technology  TechGrowers
1998        23             63          95
1999        24             81          236
**2000        -11            -38         -52**
**2001        -11            -25         -39**
**2002        -21            -38         -49**
2003        31             50          67
2004        13             11          47
2005         6             2           -1
2006        16             7           24
2007         5             19           6
2008        -37            -42         -41
2009        29             55          38
2010        17             20          39
2011         1             3           -18
2012        16             18          10
2013        33             37          34
2014        13             19          -7
2015         0             9           -4
2016        13             7           -10
2017        21             33          56
2018        -5             2           56
2019        31             49          51
**2020        21             46          182**
**2021        26             30          -2**
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Do you know the cagr of the tech. growers?

Post-discovery, from 20200326:

          Screen            CAGR  GSD  MDD  UI
TechGrowers_20200326_rdutt   44   86   -56  25
    SP1500EqualWeight        46   22   -16  2

https://gtr1.net/2013/?~TechGrowers_20200326_rdutt:h21f0.4::…
https://gtr1.net/2013/?~SP1500EqualWeight:h63f0.4::pref%28sp…

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