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Almost Half The Russell 2000 Members Are In A Bear Market

Tyler Durden's picture




 

With market internals dismally weak and 967 of the Russell 2000 index's members down over 20% from their highs (a bear market), the question is: how long can they maintain the status quo thanks to a handful of big blue chips as levered longs attempt to stay solvent?

 

Almost half the small caps are now in bear market territory... with the average member down 24%! (only 10% of the S&P is down over 20% so far but the average member is down 9% from its highs)

 

But it's clear which way the money is flowing....

 

and who is selling... and who is being sold to... as Institutional clients are dumping equities off to retail clients... thank you very much...

 

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Wed, 05/07/2014 - 15:43 | 4737087 pods
pods's picture

I hear the clippers being turned on.  Baaaaah.

pods

Wed, 05/07/2014 - 15:46 | 4737095 Slave
Slave's picture

Bullish

Wed, 05/07/2014 - 15:49 | 4737105 Say What Again
Say What Again's picture

Maybe 1/2 are in a bear market, but everyone is BTFD today.  Maybe we have a "rotation" from Tuesday to Wednesday.

Wed, 05/07/2014 - 16:01 | 4737129 LawsofPhysics
LawsofPhysics's picture

Who knows.  Personally, I just want to see what happens when the "indirect" participation at bond auctions goes to fucking zero.

Wed, 05/07/2014 - 16:04 | 4737142 Say What Again
Say What Again's picture

The Russel 2000 printed a "Hammer" formation today with its low (1093) equal to a previous hammer on 4/15/14 (1095).  This is actually a very bullish sign, if you believe in that stuff.

Today's action for RUT was ALL below the 200 DMA, which is clearly a bearish indicator.  I would expect a little pull back to 1130 ~ 1140 area, before any serious move to the downside.

Wed, 05/07/2014 - 16:09 | 4737168 aVileRat
aVileRat's picture

Yup

All those corporates who were growing on multiples vs. earnings are going to get clobbered. Can't say I'm crying any big russian tears for those 3d printers or bespoke soft drink makers.

Also tesla: oops. down 6%

 

Wed, 05/07/2014 - 16:17 | 4737195 scubapro
scubapro's picture

follow through is the key.  over 1140 and were off to 1200.   very possible that tomorrow by 11am one could see.   this turn has to power on immediately, if it fizzles at mondays low, it may drop 10% by mid month, then its work work work to dress it up by month end.

Wed, 05/07/2014 - 16:55 | 4737292 max2205
max2205's picture

Lots of dead bodies suspended below the surface. ...what an an amazing spike we'll have when those rip out a retrace.  Stay tuned

Wed, 05/07/2014 - 15:57 | 4737130 fonzannoon
fonzannoon's picture

I wonder if anyone is btfd today. This market looks like Yellen is fed up and just wants everyone in SPY. clearly the wealth effect is not working and maybe it's because people are still finding ways to lose their ass left and right in the bull run. So if you own individual equities, prepare to get the shit kicked out of you. Or you can just hang out in SPY and take the summer off.

Wed, 05/07/2014 - 16:28 | 4737227 what's that smell
what's that smell's picture

...add a yellen goose, a POMO, a FOMO, a thousand Spooge-driven MOMO ignition algos, and ten thousand coke snorting sell side analysts.....what ya got?

A buy-the-fucking dip!

Wed, 05/07/2014 - 16:12 | 4737180 BlindMonkey
BlindMonkey's picture

Oh I am so fucking confused now. Didn't Mr Yellen just get done telling congress that small caps might be in a bubble?

Wed, 05/07/2014 - 15:44 | 4737089 Gaius Frakkin' ...
Gaius Frakkin' Baltar's picture

Looks like they finally suckered in a new generation of retail investors. Have fun losing your asses.

Wed, 05/07/2014 - 16:27 | 4737222 ParkAveFlasher
ParkAveFlasher's picture

That reminds me, has anyone seen my ass?  I trying to find it with both hands here.

Wed, 05/07/2014 - 15:52 | 4737098 Dr. Engali
Dr. Engali's picture

BTFBMD. By the fucking bear market dip. If you like it at a 20% discount, you'll love it at a 50% discount.

Wed, 05/07/2014 - 15:55 | 4737122 fonzannoon
fonzannoon's picture

whiteshadow sent me this nanex chart on the megacaps and div payers. 

https://sp.yimg.com/ib/th?id=HN.608027645379609804&pid=15.1

Wed, 05/07/2014 - 16:11 | 4737177 Dr. Engali
Dr. Engali's picture

Lol. That's damn funny.... And accurate too.

Wed, 05/07/2014 - 15:48 | 4737101 riot-police
riot-police's picture

I was sure turn around Tuesday would become a Wednesday.

Wed, 05/07/2014 - 15:55 | 4737124 LawsofPhysics
LawsofPhysics's picture

Buy! Buy! Buy!

Wed, 05/07/2014 - 15:56 | 4737126 TheRideNeverEnds
TheRideNeverEnds's picture

Irrelevant, none of that junk matters.  Markets decoupled from anything fundamental long ago.  The only thing that matters is the FED and people are hitting the buy button in a panicked frenzy now that Yellen reaffirmed today central planning is here to stay and they will do whatever it takes to keep this train on the tracks.  

 

Look at it, just look; the market is exploding higher.  Every offer is met with a sea of bids.  There is only one strategy that works in the new normal; buy it before they do cause we are going higher.   

Wed, 05/07/2014 - 16:04 | 4737147 LawsofPhysics
LawsofPhysics's picture

This is not the inflation you where looking for...

move along...

move along...

next comes this...

http://www.youtube.com/watch?v=Rqa7Ml_us00

 

Wed, 05/07/2014 - 16:09 | 4737165 TheRideNeverEnds
TheRideNeverEnds's picture

Tell that to the 20, 20, 50, and 175 +point bullish reversal in the TF, ES, NQ, and YM respectievely. 

Wed, 05/07/2014 - 16:14 | 4737182 LawsofPhysics
LawsofPhysics's picture

makes perfect sense when you think about the "imperial credits" they are all priced in.  the only thing the bankers don't lie about is their desire for inflation.

Wed, 05/07/2014 - 16:04 | 4737149 colonial
colonial's picture

agree a lot with what "the ride never ends" says above, BUT...

i have long believed that the Fed used the R2K in its modeling.  That the R2K not the Dow, Dog or SPX is what they cared about.l  If this is true, what does it mean for Fed Heads?  

I wonder if the Fed fears another ripple of deflation.  Problem now seems to be that more players see QE from Fed,ECH and BOJ as problematic.  

 

 

Wed, 05/07/2014 - 16:40 | 4737158 LawsofPhysics
LawsofPhysics's picture

Talking about "deflation" with equities at all time highs is most certainly a fucking problem.

The structural/fudamental problems are all associated with captial destruction, mis-allocation, and mal-investment.

Printing money (QE) does this in proporation to the amount you print and ZIRP does this in an exponential fashion.

Both are good for destroying the debt of any institution who can actually use mark to fantasy accounting...

Wed, 05/07/2014 - 16:06 | 4737156 rosiescenario
rosiescenario's picture

Wondering where this $$$ from the sales of these stocks will go???

 

If it is momo money, it will go into whatever is still headed north, until that stops and retreats, too.

 

....and then where will it go????

 

My hope is into the PM mining stocks......

Wed, 05/07/2014 - 16:07 | 4737159 orangegeek
orangegeek's picture

The central banker's strategy is to ignore the broad indexes and push narrow indexes like the Dow Jones (only 30 stocks) to keep this ship sailing.

 

The RUT broke key support today, but the Dow was up 120.

 

http://bullandbearmash.com/chart/dow-jones-hourly-tanks-early-recovers-t...

 

Dow is closing in on another all time high.  Detachment continues.

Wed, 05/07/2014 - 16:10 | 4737169 Spungo
Spungo's picture

Dumb money is called dumb money for a reason.

Wed, 05/07/2014 - 16:20 | 4737201 Cthonic
Cthonic's picture

That last chart is priceless: BofAML's client's haven't sunk a new dime into stocks for seven years running.

Wed, 05/07/2014 - 19:27 | 4737753 goznrlpn
goznrlpn's picture

I would be careful with this. The implication seems to be that the Russell is down a couple of percent while half of the index is down -20%; how long can it last?

But comparing current prices to the 52-week *lows* instead, you can say half of the Russell 2000 members are at least 24% ABOVE the 52-week low. It's a bull market. Huzzah!

Of course that spin is BS. The member companies hit their 52 week highs/lows at very different times... the index high was 4 March, but half of the members had their high on or before 6 Jan. A quarter were on or before 23 Sep.

Take ABAX for example, a company I know nothing about by the way. The 52wk high was 51.84 on 12 July 2013 (based on intraday prices, not just the close). It then dropped -38% to 32.11 on 23 Oct 2013. It's up 25% since to 40.21, but is still -22% below the 52 week high. The company may be a load of garbage for all I know but it's not 'in a bear market'.

It'd be almost impossible for half of index companies to hit their highs or lows at the same time or after the index does; maybe if the weightings were very skewed or the member list was small, but not in a broad index like this.

The only thing that makes sense is to compare price changes over the same window. Year to date, the Russell 2000 is down -4.7% and the median member company is down -6.8%. Consumer discretionary, healthcare and tech members have done significantly worse than the index year to date (medians -11%, -11% and -13% respectively) which probably explains the overall median YTD being lower than the index YTD.

If you take -20% as your bear market indicator, then about 20% of members are down -20% or more YTD... again, compared with -4.7% for the index.

It would be interesting to see how the proportion of stocks down -20% over a 3-month window changes over time, and whether that leads the index in a useful way - maybe I will go figure it out...

(I'm more than willing to share source data for this, maybe as a google docs sheet or similar, if anyone cares)

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