Investors were hoping that the April consumer price index report might provide a catalyst for a bounce. The numbers came in higher than expected, but less than in March. There was an early dip and some decent bounce action, but it only lasted for a couple of hours before the selling accelerated once again.
The selling was broad at around three to one negative, and there were almost 2,400 new 12-month lows, but what was most notable was that it was the big-cap technology favorites like Apple (AAPL) , Microsoft (MSFT) , Tesla (TSLA) , and Nvidia (NVDA) that were hit the hardest.
These FATMAAN names covered up the weakness in the underlying market for a very long time, but now they are finally starting to catch up with the carnage that has already occurred in much of the rest of the market.
Apple has been holding up relatively well, but Wednesday it dropped 5% and took out some key support levels. It is now back to where it was last October, which is still better than the great majority of stocks.
It is very likely that a big part of the current market action is forced liquidation. Fund clients just want out and are willing to sell everything into the weakness. One of the most successful funds since the bottom in 2000 has been Tiger Global. The fund has now lost $17 billion and, in four months, has given back two-thirds of its gains since it was launched in 2001. The ARK Innovation exchange-traded fund (ARKK) is just one bad day away from taking out the pandemic lows hit in 2020.
There are numerous examples like this of how bad the action has been, but it has been a highly uneven bear market so far, with some things refusing to crack. The breakdown in Apple today may market the next step in the corrective process.
Once again, I urge great patience. Don't be in any rush to make moves. There are some fantastic opportunities developing, and we will have some great trading when the time is right.
Have a good evening. I'll see you tomorrow.
