The disconnect between the Dow Jones and growth stocks deepened again Thursday.
At mid-day, many of the high-beta, high-growth names were in free-fall, but the negativity was so great that it may have triggered some capitulation in places. The problem is that it hard to have a capitulation low when much of the rest of the market hasn't even had a minor correction.
I've been using the ARK Innovation exchange-traded fund (ARKK) as the best illustration of what many growth stocks are doing while the Dow hits news highs. At mid-day ARKK was down more than 4%, but bounced and finished with a loss of 2.9%. It still has very little support but it is down eight days in a row now and, by some measures, is oversold.
This is one of the most difficult markets I have navigated, not only because there is such a stark difference between sectors, but because so many people don't have any idea what is really happening under the surface.
The biggest problem right now is trying to position for how this inconsistency eventually resolves itself. Some stocks will have to suffer some pain to put this market back into a more logical position but it is impossible to know which ones will pay the price.
We will see if the intense selling today did purge some of the poison out of the growth names, but they have plenty of work to do in order to prove themselves.
Have a good evening. I'll see you tomorrow.