For the third day in a row, we had brutal selling in the broad market, while the senior indexes covered up the mess. Breadth wasn't as bad Monday, but certain areas of the market were slaughtered.
The ARK Innovation exchange-traded fund was down 4%, the IBD 50 ETF (FFTY) was hit for a loss of 4.8%, and select small caps went bidless and fell into the abyss. The S&P 500 was holding up fairly well most of the day but sold off very sharply in the finally 45 minutes of trading.
I've been discussing the two-tiered nature of this market for a while, but it has been hitting extreme levels the last few days. A good illustration is that there were 177 stocks up 4% on the day, but nearly 400 down 4% or more.
The good news is that the market is undergoing a very deep correction in places. The bad news is that quite a few folks don't see it, and that is keeping sentiment more positive than it should be. Typically market correction sees very correlated selling. There is a lot of selling in this case, but it just isn't reflected in a conventional way.
This is some of the most unusual market action that I can recall, because of the huge number of stocks at lows or breaking down while the indices barely reaction.
The big question is, how does this eventually resolve itself? At this point, I don't have any idea and will just have to stay patient and see what happens next. There are plenty of "good" stocks being sold due to this rotational action, but there are no signs yet that they are close to a bottom.
Have a good evening. I'll see you tomorrow.