From Peter Tchir of TF Market Advisors
Fear and Fear
Correlations are breaking down, and each asset class seems to be trading more and more in its own little world. Sometimes retaining old correlations and other times moving counter-intuitively. Each of those markets now seem to be driven primarily by fear. The markets have been split into two camps, those that are afraid of rallies and those that are afraid of sell-offs. The breakdown of many correlations is making it harder to hedge or to balance portfolios. It is adding the broken feeling in the market.
Normally the markets are portrayed as a battle between fear and greed, but more and more it looks like greed left town and all we have is fear. Fears of rallies, fears of sell-offs, and fears that someone knows something that you don't, fears of jobs, fears of tap on the shoulder, fears on redemptions, fears that the summer is almost over and you didn't enjoy it, and worst of all, the fear that your starting quarterback will be injured and the team will sign Brett Favre.