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.
10 Likes
The market sure has bad breath. 
But Iām sure you meant breadth.
Elan
14 Likes
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, Iām 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 ābadā than this fully 13% of all days in the last 15 years.
Whatās probably more concerning is that breadth was already pretty bad when the market index was hitting fresh highs lately.
Thatās frequently a sign of trouble of the toppy kindā¦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 canāt hold everybody, so its prow also turns down.
Thatās one of the few indicators that would have saved someone from the 1987 crash.
Jim
27 Likes
In any event, thatās 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_
1 Like
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
40 Likes
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
5 Likes
In case anybody cares, neither my major nor short-term bottom indicator is firing today.
ā¦
Meanwhile, the S&P crossed below its 200DMA today and the NAHL is the lowest since March 2020.
Soā¦bad.
But not so bad itās good?
Jim
4 Likes
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 pandemicās 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-stoā¦
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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.
Iām just hoping that BRK.B drops to 300 so that buy order gets filled.
6 Likes
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 donāt think a recession is on the horizon. The market is responding to the beginning of the end of free money. Itās 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
12 Likes
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 Iāve 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 thatās 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 Mungoās.
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. āIn the short run the market is a voting machineā¦ā 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 itās worse because itās happened in what, 8 weeks? (e.g. Upstart).
FC
12 Likes
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 itās worse because itās happened in what, 8 weeks? (e.g. Upstart).
FC
āā
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 donāt 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, thereās 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 wasnāt about fundamentals on the way up (except at the beginning), and itās 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. Itās 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 itās worse because itās happened in what, 8 weeks? (e.g. Upstart).
While Upstart has been slaughtered, itās 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 āSaulā stocks Iāve superficially reviewed, Upstart looks the most interesting because theyāre still in robust hyper-growth, have a huge market to address, and they are already showing net GAAP profit. Iām not buying it yet, but if does fall way further from here, Iāll 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:
āI feel like Argentinian currency.ā https://discussion.fool.com/a-dark-day-17968030.aspx
āI didnāt think it would happen to meā https://discussion.fool.com/quoti-thought-it-was-all-those-otherā¦
āBIG, BIG gains with DELL and CSCO and othersā https://discussion.fool.com/author-jansz-date-73002-number-13059ā¦
āheld Cisco at $82 and sold at $13ā https://discussion.fool.com/in-2000-2001-after-the-dotcom39s-burā¦
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::ā¦
https://gtr1.net/2013/?~SP1500EqualWeight:h63f0.4::pref%28spā¦
7 Likes