Stock Market Today: Feeling Defensive At the Record High

December 13, 2021, 4:00 pm EST

Feeling Defensive At the Record High

S&P 500 made a record high last Friday (12/10) but stock markets behaved very bearishly or were defensive today with DJIA -320 points or -0.9%, S&P -0.9%, Nasdaq -1.4%.

When checking out the sector bar chart as shown in the featured picture, we can easily see only defensive sectors are up: healthcare, utility, REIT, and consumer staples. Looking into more details, we can highlight the following points where bulls were exhausted and bears are rising:

  • Semiconductors: NVDA -7%, AMD -3%
  • Automobiles: TSLA -5%,  GM -6%
  • Airlines & Cruises: UAL -5%, NCLH -4%
  • MEME: GME -14%, AMC -15%
  • Cryptocurrencies: Bitcoin -8%, Ethereum -10%

At the same time, there were many breaking out and 52-week highs from the defensive areas:

  • Utility: NEE, AWK
  • Healthcare: DGX
  • Consumer Staples: CHD, MKC, HRL, KR

The change of leadership should be self-explanatory. The reasons behind this transition are 

  • Record High Debt Level
  • Near 40 Year High Inflation (CPI) 
  • Rising Rates from the Fed
  • Troublesome COVID-19 Resurgences
  • Unstable China Economic Condition

Investors or traders feel unsafe to put money in these markets so there is a strong outflow from risky assets into conservative asset classes mentioned above. There are no apparent triggering events to make the sell-off today but market participants made a quick adjustment on their portfolio to prepare for it.

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