The primary theme of the market recently has been, "It is worse than it looks."
The indexes continue to do a very poor job of reflecting what is really going on in this market. What is going on is carnage in wide areas of the market. Growth stocks, biotechnology, software, small caps, China names, crypto-related, SPAC-related, electric vehicles, and just about everything else is being hit hard and not finding any good support yet.
There are dozens of stats that will illustrate how bad this market has been. One of the most apparent is that over 950 stocks hit a new 12-month low Friday, while the Dow finished with a small gain. The Nasdaq 100 (QQQ) had 35 stocks with gains and 66 with losses. Overall market breadth was 1,880 gainers to 6,300 decliners.
What makes this market particularly frustrating is how the profound weakness is not reflected in the indexes. Probably 90% of the market is already deep into a bear market, but since a few big caps are holding up and they hold up the indexes, it isn't being reported or acknowledged.
The good news is that out of the chaos, some fantastic opportunities will develop, but we have to suffer some tremendous short-term pain before they fully develop.
We should have more information on the new Covid variant next week, and, one way or the other, it will likely be a catalyst that triggers some major movement.
This is by far the worst action since the Covid bear market that started in early 2020. But, in some respects, the action is worse, because it is stealthy and is not developing in the usual manner. It is taking longer to generate the sort of extreme sentiment that eventually produces a bottom.
Keep plugging away. I assure you that the pressure is going to sudden lift one day, and you'll wonder why things were so ugly for so long.
Have a great weekend. I'll see you on Monday.