The Summer of Discontent

The stock market continues to plunge. The S&P 500 has been as low as 1,154.10 this morning. That’s another 100 points below the close from last Tuesday’s awful market. That S&P 500 is currently down 3.65%.

Once again, it’s the cyclicals that are getting pounded the most. The Morgan Stanley Cyclical Index (^CYC) is currently at 852.97. That’s a stunning drop of close to 21% since July 21st. The CYC is trailing the market for the 17th time in the last 18 sessions.

The fact that this sell-off is being led by cyclicals tells me that it’s more due to economic concerns rather than concerns of the debt-ceiling debate. Although financials aren’t doing well, Treasuries continue to soar. That’s an odd thing to see after a downgrade. The Long-Term Bond ETF ($TLT) is up more than 9% since July 14 when S&P warned that it might down U.S. debt.

Gold just broke $1,700 and the $VIX is now over 40.

Here’s a look at the cyclical index divided by the S&P 500.

Posted by on August 8th, 2011 at 10:59 am


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