The technology stocks that have been recently leading are old tech such as International Business Machine (IBM), Microsoft (MSFT) and Hewlett-Packard Company (HPQ). That's akin to me asking my grandmother for Tinder advice. The Utilities Sector, (XLU) made an intra-week high not seen since June 2008. The Consumer Staples Index (XLP) have been underperforming the Consumer Discretionary Index (XLY) since early March. These are all exhibit signs of a risk-off market environment.
And finally, high beta discretionary, biotechs, and social media stocks are typically the first to get sold when market participants become concerned over a possible correction and for the last couple weeks they have been pummeled.
What All This Selling Means
Without over complicating things, let's take a look at what is likely going on. We have had a five-year bull run that began in 2009. In the fifth year, last year, the market ended up over 30% on the year. Things got a tad bit stretched, shall we say. They went too far too fast and when that happens within a trend (currently a bullish one), a period of consolidation takes place resulting in some mean reversion. I wrote about that at the start of the year here.
Although the selling may appear excessive at times, when viewed from a broader perspective, it exhibits signs of a healthy market resetting itself. You can see this broader picture with the following monthly chart of the S&P 500.
At the time of publication the author had no position in any of the stocks mentioned. Follow @Sassy_SPY This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
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