Markets in Turmoil? It’s Ugly Chart Time!


The S&P 500 is down -7.7% so far in 2022, but market participants agree -- this is one of the toughest markets in some time. 

First, let's get meta.

Our last "Markets in Turmoil" article was released on Saturday, December 4, 2021 -- the day after the December 3 low in the S&P 500.

Since we perfectly bottom-ticked that move, we're curious to see if the market skyrockets Monday.

But for now, things are looking quite shaky with the S&P closing below the 200 day moving average for the first time since June 26, 2020.

Interestingly enough, the T3 Live community nailed the downturn. In last weekend's sentiment survey, just 33% of traders were bullish on the S&P 500 for the next 30 days -- a huge decrease from the past few weeks:

The Growth Stock Effect

Cathie Wood's Ark Innovation ETF (ARKK) was an absolute monster during the initial phases of the COVID-19 pandemic.

ARKK was up over 150% in 2020.... but things have certainly gone South, as you can see on the chart: 

ARKK is now down -24.4% year-to-date and is -55.2% below that $160 high from back in February 2021.

With the Fed taking away the punch bowl as rates rise, growth stocks have been torn apart.

One prime example is major ARKK holding Robinhood (HOOD), which is down 85% from its post-IPO high of $85:

We are also seeing big time weakness in Biotech (IBB):

Semiconductors (SMH) were a MASSIVE source of leadership in 2021, rising +41%. But SMH is down -12% in 2022.

VIX Approaching December Highs

The VIX is up, but even with the growth stock meltdown, it is not quite at the December highs. 

What does this mean in plain English?

Well, the VIX uses prices of various S&P 500 options to measure traders' expectations of volatility.

So traders are showing some fear, but not as much as in early December.

Helpful Link: Our Primer on the VIX

The Bitcoin Beatdown

Bitcoin is now down -23.8% year-to-date as traders continue to shed risk.

No surprise there -- and it will be interesting to see if Bitcoin buyers step up to buy the dip.

Meanwhile, Ethereum is in even worse shape with a -36.8% YTD drop:

Housing Stocks Busted Up

Few traders follow housing stocks -- but they've been a big source of action for the past couple of years.

With interest rates spiking, the ITB ETF is now down -16.5% in 2022 after a blistering +48.6% run in 2021.

The Ultimate Push Pull

The market has two opposing forces at work:

Downward Momentum: risk assets are cratering

Negative Sentiment: traders are VERY bearish, which typically happens near bottoms, not tops.

So the question now is, have we reached the point of maximum fear?

Is higher inflation, the supply chain crunch, and a less accommodative Fed all priced in?

Let us know in the comments, or by joining the T3 Sentiment Survey Panel!

Leave a Comment:

1 comment
Robert Brady says January 22, 2022

Markets always over shoot going up and going down. When all the selling is over and the so called Weak hands have left the market, the socks will rebound again. I am sure this bear market will last the rest of the year and into next year as well. Got to shake the excesses out as much as possible. Could have a 30 to 50 percent correction here and in Tech it could be 70-90 percent depending on the stock or etf.

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