The Week That Was On Wall Street
What a week on Wall Street. The S&P 500, Dow Jones Industrial Average, S&P 400 Mid Cap Index and Rusell 2000 closed at all time highs. But the NASDAQ 100 did not. It is still -6.30% of its all time high. It struggled this week.
The NASDAQ 100 lost ground on Monday, Wednesday and Friday but rocketed on Tuesday and Thursday and as such closed higher by 2.20%. However, when you look under the hood one comes away with concern. Many top performers are down more than -20% from their highs including Tesla (TSLA) and Shopify (SHOP) and even Nvidia (NVDA) is down -16% for the year.
ARKK a fund run by Cathie Wood is down -19% from its February peak. The media is obssessed with this fund, never a good thing. On Monday it was down -29% since its top. Most stocks in the ETF are taking on water as investors bail and this ETF could be the canary in the coal mine. Prediction: it closed today at $126.68 after hitting a low of $110. The ultimate low before this cycle runs its course will be $100 or lower.
The reason high growth stocks are becoming toxic is because interest rates are rising. The yield on the 10 year bond is now 1.625%. It has climbed from 0.92% at the beginning of the year, this move is "fast and furious". A move up to 2.00% in short order will make the pain of February/March look like a walk in the park. The sudden jump in rates is beginning to affect other asset classes around the world. This is a great time to raise some cash.
Gold via GLD is now down -9.46% for 2021. Other commodities are mixed with oil performing the best. Foreign markets like China are falling as it is down over -11% from its high. Our favorite ETF to track all asset classes AOR has formed a nice head and shoulders formation. Such a formation can be a precurser of things to come. We will be writing on some of these issues over the weekend so make sure to check back.