Swingers

The increasingly wild price swings continue to be the true message of this market of late, as bulls thought they were totally in the clear for an unbridled short squeeze higher after the monstrous snapback rallies in NVDA, semis, and many tech names yesterday on the back of the FOMC, then META earnings last evening. 

And while META is still soundly higher as I write this, the broad market has taken a sharp turn lower off a stagflationary ISM Manufacturing Index report this morning, meaning prices are sticky high while economic growth looks to be sliding away.

We do have AAPL and AMZN earnings tonight to pile on to an already-loaded week, considering the sheer size of both firms coupled with how adored the stocks and firms have been since at least 2007, followed by tomorrow morning's jobs report. 

Simply put, increasingly violent price swings, as we have seen for a few weeks now, after a period of prolonged uptrends and subdued volatility are historically one of the most bearish market omens. Bulls counter that it is an election year and that "they" (Janet Yellen, mostly) will simply not "let" the market fall, coupled with Powell and The Fed having a soft landing within view. 

I continue to reject both views and, instead, see a deteriorating market with risk substantially lower as volatility has a large runway higher. 

In addition, note that small caps finally look to be losing steam. They were an extremely popular rotation idea all year long even as they disappointed until recently. As we have noted here and with Members throughout this year, whenever we have a truly bifurcated market it is not surprising to see a convincing rotation into the laggard which gets bulls excited for a sustained move. 

However, the rotation inevitably fails, and laggards like ARKK, below not he zoomed-out daily chart, must deal with the fallout of a slowing economy, sticky high rates (even with a small rate cut in September potentially coming), and a chart which looks ready to wipe out lower as Cathie Wood's went from Wall Street darling to outcast the last few years.