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The price action in most stocks has been notably bearish in the past few weeks. We saw quite a few green opens (gaps up) and red closes – the morning gains faded throughout the day and the indexes closed near their lows of the daily range. SPY and QQQ slashed through their 50dma very easily; then bounced back and found resistance right under their 50dma. In the meantime, correlations among most stocks have increased and they started to move together – something we typically see during corrections. The market reaction to earnings has completely changed – only a few weeks ago, stocks were rallying on missed estimates and lowered guidance. Lately, the market has been selling both positive and negative earnings surprises. Sentiment has changed since Powell’s remarks at Jackson Hole. Now, the market is worried that the Fed will keep tightening until inflation or job numbers fall significantly, whichever comes first. As a result, most stocks are under pressure. Nothing is safe. Even energy and metals that held relatively well until last week, are starting to sweat a bit.
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