Trader Talk: What’s next for markets?


You knew this was coming.

The market internals had been flashing warning signs for a couple weeks: very few new highs, very sloppy advance/decline line, low short interest, and a lot of talk about FOMO (Fear of Missing Out) and TINA (There Is No Alternative).

All signs of frothiness.

So what is this? Is this a one-day event? Is it a 10% correction that lasts a couple months, and then reverts to growth, which is what happened in January 2018, when the market was similarly stretched? Or the start of a longer-term sell-off?

No surprise, the drop has been mostly a momentum-driven event. The heaviest selling has been in the highest momentum names (megacap) and beneficiaries of work-from-home…


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