Coming into this week, Omicron and its effect on Fed policy was the crucial dynamic. NorthmanTrader nicely summarized it in the above tweet. On Tuesday, Powell threw bulls for a loop when he was far more hawkish than expected in testimony before Congress, sending the market reeling.
While the S&P was only down 1.90% and the NASDAQ 1.55%, it was in reality a brutal day for stocks. NYSE + NASDAQ Advancers to Decliners was 2,106 / 6,040 or 3 Decliners for every Advancer and volume of 13.5 billion was as heavy as I can recall of late – about 50% higher than Monday when stocks rallied.
As I wrote in yesterday’s blog, 7 stocks are propping up the entire market. The QQQ – the most important security in the market – is a good proxy for these 7. The QQQ traded in a range between $390 and $400 for almost all of November. IMO a decisive break below and failure to reclaim $390 would mean that the bull market is likely over. I wouldn’t be surprised to see it happen this week.