The market is plunging again.
And we think this paragraph from BTIG strategist Dan Greenhaus (@danBTIG) really captures the spirit well of what’s going on:
Well, that was fun! After such a long period without 1% days, the S&P has now had a bunch, including five of the last seven sessions. That, of course, is little consolation to clients looking for additional volatility, but we’ll say this again unequivocally: the tone contained in client conversations has shifted meaningfully. What was once an assumed march higher for stock prices is now a (nearly) assumed march lower. Sentiment has done a 180, and with just 26% of the S&P and 17% of the Russell 2000 trading north of the 50 dma, it’s hard to blame people.
It seems like a good time to remind clients of how many thought “buying the dip” was a good strategy the last few quarters/years. That said, we leave the technicals to Katie Stockton, but the Russell’s chart looks terrible and many clients think upside catalysts look few and far between. Plus, as many have pointed out, the S&P is “just” 4% off its highs, not a meaningful correction. Perhaps. But it’s always darkest before the dawn, and in the midst of the darkness, it’s worth remembering that dawn will again arrive.
One month ago there were literally no bears left. Everyone had flipped bullish, and nobody could think of a good reason for stocks to go down.
And now, people can’t think of any “upside catalysts” and everyone thinks the markets are going lower.
What’s interesting is that there’s no obvious change of stories. Sure China is slowing, and the European economy is bellyflopping. But so? How is that news? It’s not. It just becomes news and becomes significant after the market sells off.