The market has been undergoing a corrective process for a little over two weeks now and has yet to show signs of a bottom. The selling picked up Thursday, when Fed Chair Jerome Powell failed to satisfy the market with his comments about the potential for inflation and the Fed's plans for dealing with it. Powell offered some generalities, but failed to address policy dealing with impacting the yield curve.
The inflation issue is rather murky, but the bottom line is that the market didn't like it, and bonds aren't buying it. The selling continued, and this time it was the small-cap and more illiquid names that bore the brunt of the damage.
The Russell 2000 exchange-traded fund (IWM) took a 2.7% hit, but many small caps have much higher "betas" and were down 8%-10% or more. If you have been focused on high momentum, speculative small-caps, then you probably took a pretty good wack Thursday.
The good news is that many individual stocks have suffered deep corrections already and look much worse than the indexes. It has been a rotation correction, but much of the market has already been hit. The correction is likely not over, but we should start seeing some better stock-picking start to emerge when the focus shifts to finding the best values among the wreckage.
The most important thing to do right now is to maintain a high level of flexibility. Dump positions that are broken, and make sure you have cash on hang. Bottoms tend to occur much quicker than tops. So, it is important to be ready to move fast as this action plays out.
Have a good evening. I'll see you tomorrow.