Monday, February 15, 2016

LIMIT DOWN: Velocity of Collapse

What comes next will make Lehman seem like a picnic

For seven years straight, Skynet has executed a brutal sector by sector rotation that systematically obliterated individual stock holders. The indices were held up only by an ever-dwindling cadre of mega-cap stocks. Now, held up merely by Utilities and Consumer staples. 

This is the Wilshire/S&P ratio. The largest stocks are in both indices, but the Wilshire contains the entire rest of the market (mid-cap, small cap, micro cap). Which means that the average stock is in free-fall, and this is the most concentrated market ever. 

This ratio bottomed at the END of Wave 3 down. Circled:

The ratio held up decently well until August...

So far, the volatility has been elevated but contained...
1 day rate of change: