The MarketSmith home screen shows “Market in Correction” with 846 stocks down on volume and 200 stocks up on volume.
For the past 20 weeks we’ve seen more stocks down on volume than up at the same time defensive stocks in the consumer staples, utilities, and healthcare sectors began to outperform consumer discretionary stocks.
It was these indications coupled with a bearish divergence at the January high that indicated we should start looking for weakness to persist. Since then, we’ve been steadily reducing exposure to equities and hedging along the way.
S&P 500 – In Correction
The markets gained over 119% from the February 2020 “Covid” lows, peaking in late December, early January. The S&P 500 has given back nearly 20% in 20 weeks.
We’ve also noted Fibonacci levels for reference, should weakness persist.
MarketSmith Growth 250 – Weakest Stocks
The screen below shows the 5 weakest stocks tracked by MarketSmith 250 as of Wednesdays close.
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Coinbase Weakness – Customers Exit
Coinbase stock remains weak, selling pretty hard in the last few weeks. Earnings aren’t good. (left side panel) and MarketSmith metrics reflect the weakness.
The company on Tuesday said that it holds $256 billion in both fiat currencies and cryptocurrencies on behalf of its customers. Yet, it was also noted that in the event it ever declared bankruptcy, “the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings.”
In other words, Coinbase users would become “general unsecured creditors,” with no right to claim any specific property from the exchange in proceedings. Their funds would become inaccessible.
As a result, Coinbase customers are exiting the already beaten down stock.
Join us today in the trading room for our LIVE broadcast during market hours, as we navigate the current environment. Watch, listen, and trade from 9:20 AM to 4:15 PM Monday through Friday.
Happy Trading,
Vinny
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