For the second day in a row, the indices fail to reflect the intensity of the selling that is taking place in many areas of the market.
Breadth is running 2,200 gainers to 5,500 decliners, which isn't terrible, but small-caps (IWM) are being slammed with a loss of 2.4% and are close to testing support at the 50-day moving average. The Nasdaq 100 has been lagging for weeks now and is now down 9% from the highs hit on Feb. 16.
The catalyst for the selling is comments by Fed Chair Jerome Powell. Powell tried to sound dovish and assure the market that higher inflation was not a problem, but the bond market simply doesn't believe him; the 10-year bond yield moved over 1.5% and is reflected in the poor action in the 20+ Year Treasury Bond ETF (TLT) .
At this point, many stocks are being dumped regardless of their individual merits or valuations. This is the opposite of the stock-picking action we enjoyed for so long. Picking good stocks is not going to help you much in this market right now since they are all being sold.
The good news is that eventually -- and the keyword here is "eventually" -- this will produce some great entry points, but it is extremely dangerous to try to predict the lows at this point. If you are buying, it is imperative that you do so very slowly and on a wide scale. Make sure you keep plenty of powder dry.
The bears have the momentum, and Jay Powell gave them some ammunition to use by not being more of an inflation hawk.