Nasdaq Down 5%, DOW and S&P Down Over 3%: Just a Start

The FANGs led the Nasdaq on the way up and lead again on the way down. Technology shares were hammered close to 5%.

The Wall Street Journal reports Quickening Retreat From Tech Sinks Market.

> U.S. stocks suffered their biggest decline in more than seven months Wednesday, as investors accelerated their retreat from fast-growing technology stocks in favor of shares that have been overlooked.

> Major indexes have started the fourth quarter on their weakest footing since the beginning of 2016, and the swift fall has some investors wondering if this is a brief stumble or an overdue reckoning for U.S. stocks after months of outperforming global markets.

> The rotation out of tech and other growth stocks—among the most popular trades of the year—to so-called safety stocks, such as utilities companies, was sparked in part by the recent jump in government bond yields and the Federal Reserve’s bid to tighten monetary policy.

> But there have been other warnings signals that made investors nervous. Recent data has showed a slowdown in both housing and auto sales, both of which are closely watched indicators of U.S. economic health. Even more concerning: trade tensions between the U.S. and China appear to be worsening.

> The result: A simultaneous selling of 2018’s biggest stock-market winners.

Moving Averages

Leaders Up, Leaders Down

Feed Me

Big Names

Unsustainable US Share

It Never Fails

There's that cash on the sidelines stupidity once again.

Mike "Mish" Shedlock

Comments (19)
No. 1-15
Corto
Corto

No rotation into gold or bonds... yet....

Casual_Observer
Casual_Observer

And so it begins.

lol
lol

central banks will never allow stocks to fall (ever),if they have to print a trillion dollars a day and buy every single share of every publicly traded company to keep this scheme from collapsing they'll do it (until they can't)!

abend237-04
abend237-04

Ha! Would that 'cash on the sidelines' be coming from those households refusing to run into the smoky building BEFORE the flames broke out or just those sitting inside on the $650 Billion of margin debt?

caradoc-again
caradoc-again

Wonder where it will all settle down to if there were no interventions.

2banana
2banana

Amazon P/E is still at 140. Twitter P/E at 85.

Still a long way to go...

Six000mileyear
Six000mileyear

Margin calls will force more selling of anything that can be sold, not just the stock that was purchased using borrowed funds.

truthseeker
truthseeker

Well the buy the dip boys were right again when they bought the dip with the 10% correction, so we’re not even close to that so will they buy this dip. and b right once again?

mark0f0
mark0f0

Valueless FANGs should revert to zero or near to it.

Sechel
Sechel

markets eventually correct. who knows if this is the start of something real or not. i've thought the market as over-valued for years.

i'm more thinking about trump(like most presidents) taking the market going up as proof of his economic leadership. it isn't. Obama did the same thing. Today Trump even said a correction is healthy. What I'm waiting for is if the market should go down for an extended period is the inevitable search for blame (Democrats or the Fed would be my guess)

Sechel
Sechel

market is over-valued is significantly by scales. I'm waiting for the inevitable 10% downward move and analysts going on TV and declaring the market somehow cheap. We haven't had a true correction/bear market in years. And I'm not talking 2008 style. I'm thinking mid 70's style.

thimk
thimk

it will be interesting to see how the algos perform on the downside.

KidHorn
KidHorn

All cash outside of federal reserve notes is fully invested at all times. And the federal reserve notes are never invested. There is no such thing as cash on the sidelines.

MorrisWR
MorrisWR

This was so easy to see coming. I went short the S&P two days ago and already am up 90% (puts). I laugh when I see people say Elliotwave does not work but they just do not take the time to study it. I have for several decades and if you know how to use it, these tops and third waves down are perfect times to go short (or long in an opposite market). I’ll probably close the position and look for closer strikes.

MorrisWR
MorrisWR

They think they can hold markets up but it never happens. Look at the numerous stock declines on record.