We have an index making new highs with the internals in horrendous shape. By definition, this alone is a reason to increase cash exposure. The net marginal buyer of equities is in real pain sustained bull markets need this investor. A total of just under $4 TRILLION has been wiped out of just a few hot money ETFs this year.The totals above add up the cumulative market cap loss of the individual equities within these popular ETFs. There has been nearly $800BN of lost market cap within the ARKK Ark Innovation ETF’s holdings. $90B in Canadian Cannabis names. Over $2T in Chinese tech companies. Over $500B in SPACs. Finally, there has been over $300B of lost market cap in the ICLN Renewable Energy ETF’s holdings.
This speaks to how mega cap equities are the only reason the market continues to trade at the highs. There is significant weakness beneath the surface. The net marginal buyer which drove the bull market is seriously wounded . We suspect mean reversion time is near, cream rose to top otherwise known as the flight to quality.
From Bear Traps Report.
