Was the S&P 500 the last proverbial man standing?
Thursday’s -2.09% clobbering officially wiped out the S&P 500’s (IVV) YTD gain. Put another way, three-months of gains were lost in single trading session! (See chart below)
The swift decline doesn’t come as a surprise to our readers, as we’ve been warning about the stock market’s bad breadth among other red flags.
On April 2, my colleague Chad Karnes wrote in ETFguide’s Technical Forecast:
“The S&P 500 only had 51 companies make a new 52 week high today, even though it also made a new all-time high. This compares to 200 companies in May 2013 and 90 at the March price peak. The new 52 week high data of the Dow and S&P shown at the beginning of this update supports the RSI divergence warning as well as the implication that each rally is supported by fewer and fewer companies than the previous ones and should eventually result in a rollover of the market.”
Momentum stocks (MTUM) have declined around 4% over the past month and sectors that were previous leading on the way up like biotech stocks (NYSEARCA:BBH) are now leading on the way down.
Small cap stocks sank around 2.78% while the CBOE S&P 500 Volatility Index (VXX) jumped almost 15%. The S&P 500 (GSPC) and VIX move in opposite directions around 80% of the time. Our latest time stamped April VIX trade gained +21%. (See our Weekly Picks from 2/12/14)
The best time to prepare for the stock market’s next move is always the same; before it happens, not after.
The ETF Profit Strategy Newsletter uses technical and fundamental analysis along with market history and common sense to keep investors on the right side of the market. We cover gold along with other major asset classes like stocks, bonds, and currencies. In 2013, 70% of our weekly ETF picks were winners.
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