Monday, February 8, 2016

And Now, The Dow

The average stock has been getting monkey hammered for two years while indices clung to all time highs, due to relentless sector rotation. Now, for the first time, ALL sectors are red.

The average stock within the S&P:

This is all just Y2K deja vu: During the DotCom bubble, the Nasdaq led the market higher, going parabolic into March 2000. Earlier that year, the Dow underperformed substantially, as everyone piled into Tech. When the Nasdaq collapsed, the Dow rallied for a few days, and then everything rolled over at the same time. That last gasp was the rotation into defensive stocks which were the last to fall.

The max pain trades today are in Financials:
Goldman Sachs:

Lending Tree

Bankruptcy rumours are swirling in the Energy space...

"How much pain does Saudi Arabia want to inflict?"
The fantasy that this is all a Saudi conspiracy persists...


Energy MLPs (Tax shelters) are getting hammered by an article in Barron's saying they're overleveraged and will need to cut dividends...

"The MLP sector, which totaled over $600 billion at its peak—it’s now $300 billion—has long been popular with retail investors thanks to high yields and tax benefits. Our negative coverage of Kinder Morgan and Linn Energy probably generated more reader backlash than any other articles we have done in recent years."

Linn Energy:

Biotech is beyond obliteration
Revenueless Biotech is going to zero:

The IPO market is done

And there's no buyer for overvalued Tech when the momentum reverses. Been there done that, Y2K:

Deja Vu