The stock market has always come up with new ways to challenge investors. What seems so obvious rarely works, and what seems irrelevant surprises you months later with a bottom-left to top-right chart.
The Nasdaq is now the Nasdaq index as it has spent the year going backwards. All mega cap names have been sold out.
The electric bears have been attacking the electric car business for some time, but they’ve picked up steam and taken 68% of Tesla away. They took a lot more percent from other EV names, but Tesla was by far the biggest value change in market cap. A year ago we couldn’t get Tesla bulls off the podium. Meta and Alphabet were shelled along with the rest of the communications business. Amazon fell 50% after years of maintaining a high price-to-earnings multiple. Microsoft and Apple also fell significantly. I’m not sure anyone expected the magnitude of sales in the Special Six.
One of the things that surprises me is that the Nasdaq is down only 30% even though the juggernauts have fallen so much. In fact, there are a whopping 25 positive Nasdaq 100 stocks for the year! I know that surprised me too.
Professional management
So the subsurface rotation was massive. It would be interesting to review all of these long-term portfolio strategies. Were they able to adjust to the large-cap sell-off or were they too stubborn to change? This is a year where technical analysis should outperform fundamental analysis. Everyone’s boat goes up in a bull market.
ARKK
I think the ARKK chart set a record for an ETF this year, having an SCTR ranking below 10% all year. It was the worst 1% for most of the year. Yet it still attracted capital inflows. This is remarkable storytelling. Yes, I never want to short-circuit innovation, but it should be properly evaluated before investing in it.
For me, just a few weeks ago, I published an article on the collapse of oil stocks. There’s a reason we look at the charts every week. When things change, we have to change too. I’ll be covering this area of the market in my weekend newsletter and you can see everything we’re doing at Osprey strategic for only $7 for the first month.
Have a wonderful Christmas time and let’s get off to a flying start in 2023!
Gregor Schnell, CMT, is a Senior Technical Analyst at StockCharts.com specializing in intermarket and commodity analysis. He is also co-author of Stock charts for dummies (Wiley, 2018). Based in Calgary, Greg is a board member of the Canadian Society of Technical Analysts (CSTA) and Chair of the CSTA Calgary Chapter. He is an active member of both the CMT Association and the International Federation of Technical Analysts (IFTA).
