Market breadth was horrible. An incredible 450 stocks that trade on the S&P 500 were down today. The NYSE closed down -2.81% with 1937 stocks closing lower, and just 317 stocks closing higher. The sell-side volume on the NYSE came in at more than $3.4 billion while buy-side volume was just $239 million.
Where did a lot of that money go? Bonds.
There was a major flow of money out of stocks and into bonds. We have not seen a move out of stocks and into bonds like we experienced today in a long time.
Big institutional investing firms and hedge funds are buying bonds and selling stocks as they realign their risk.
Valuation really doesn’t matter in a market like this. It’s all about strategic realignment and reducing risk exposure.
The massive move into bonds is not into riskier corporate bonds or high-yield bonds. The buying is in lower risk Treasury bonds.
On Monday, December 3, 2018, I sent the following text alert to Premium members:
Once again, another stock market prediction that got traders out a day before the market plunged. My prediction wasn’t really that amazing. Overnight futures on Sunday were ripping which resulted in a massive gap up open. But then, instead of the market trending higher, massive amounts of profit taking hit markets as traders sold the gap up open. If the psychology of institutional traders and money managers had really changed from the Powell flip or the 90 day ceasefire in the China trade war, markets would have continued to trend higher after the gap up open on Monday but instead they fell. Short sellers began moving in and by the close, we had a bearish Hanging Man candlestick pattern on the daily chart of SPY.
The Hanging Man at around 281 resistance suggests this level is a significant pivot point and psychology level for both Bulls and Bears.