Along comes a day like Thursday when all the funds jumped out of Big Tech for a day and into small cap growth.  I left the screenshot above as a reminder of the non-events that were going on the last time this happened.  As noted this only happens near the end of big declines, not at the start of them.

I can read that as the hedge funds are selling the best stuff last.

So what does this mean?

I am thinking sharp move, then rally

If 4 out of 4 times afterward means that it was a multi year bottom, then we could indeed be in the same spot.  Remember IWM was flat on the year until Thursday. That means no small cap rally when SPX was up 18%.  Inflation was killing small cap and maybe the higher rates are doing the job for a recovery in that sector.  

That also means slower growth which could chop into Big Tech.  That will make this earnings cycle even more important to keep the Mag 7 flying.  Of course you can forget trying to time the market and learn to trade using Weekly Profit Cycles and the two way trading style that took me 30 years to figure out.  Once you learn the WPC cycles system, timing the market looking for SPX protection is in the rearview mirror.

A low PPI number today will likely lead SPX lower again, with a jump in IWM.  My guess is that will be the low in SPX until we see more earnings.  I will likely dump the SPDR S&P 500 Trust (Ticker: SPY) puts I am riding.

To Your Trading Success,

AG