Worst day since March

An over the air update will fix it

Although the SPY was down –3% mid-morning, and although the FANG stocks were down on the whole, bubble names like ZM, PTON, SHOP, and PDD were up mid-morning. NKLA went from down to up. Sure, with the economy not likely to recover for at least 2 years, at least as the Fed seems to see it, why wouldn’t Robinhood traders need to buy stocks at a p/s of 76.

FCEL was up over 20% yesterday and is back down –25% today. Hydrogen names are volatile.

USDCAD was up 157 pips, reversing a downward –2000 pip move from March perhaps? COP is –5% while XLE is –6% as well. The morning is looking like a risk off day is in store.

With the SPY –4.75% with two hours left many issues are down –5%. Oddly, ZM is up 2%.

By the end of the day SPY was –5.7% and ZM only managed a .68% gain but most issues were down –5% or more. That odd divergence between FANG and the rest of the market has ended today as both FANG and the rest of the market are moving down. 

MSFT, a leading FANG member, broke a key $191 level. Yesterday’s breakout to new highs past the February high has fallen back today. This could suggest the old $191/131 price box is back in play. I see the FANG as the leaders, the bubble names like ZM as the hangers on and the rest of the market as the splash damage. With so many stocks above an RSI of 70 obviously many names have followed FANG up to this point.

USDCAD was up 205 pips by the end of the day, a large risk off move. VXX was up 33%.

Because of the size of the move, today certainly feels like a pivot day. Of course I noted odd divergences in the FANG and the rest of the market during the last two days so that if this is a pivot, it started three days ago. That divergence was clearly a signal something was not quite right. 

The weirdness with TSLA nearing TM values was more a sign of the apocalypse, along with HTZ, CHK and other moves that made no sense. The NKLA move (which then was copied by TSLA) was also unusual but these sorts of things don’t necessary scream market stress. The FANG/market divergence, however, made my ears perk up.

With so many indicators at extremes, such as the MSCI global index forward p/e near 20, a level not seen since 2002, the collapse in profit margins while stocks still continued to rise to new records, 2 standard deviation moves in growth vs value outperformance, the extreme number of stocks with RSI greater than 70, extremes in the put/call ratios, in short whatever you want to look at, it is clear the market is nuts. A spike in Google Trends searches on speculation only underscores this euphoria. Could today mark the real start of a change in direction?