The market continues to put pressure on the Bulls

Woe to tech investors, who poured $ 2 billion into exchange-traded funds until yesterday. Woe to the Bulls who bought S & P500 on Labor Day on their way to glory and fortune.

None of these players certainly has a smile on the face. The market for the fifth consecutive day cuts them. VIX (the fear index) is over 20, the S & P500 has fallen by 5% in three weeks, and 10-year bonds are approaching their 2011 peak.

The conditions that helped investors are now to their detriment. Interest rates are rising and company profits are about to start shrinking, and this threatens the stability of the longest bullish market in history.

Eight interest rises in 2015 may not have led to the end of the bull market, but it is sure that this has begun to influence. The S & P500, which climbed 2.2% on Tuesday, fell 1.4% yesterday and the VIX index reached 21.5. On the above chart, we see the current S & P500 growth value, which is slowing down and consequently a downward trend forecast.

At the peak of high volatility, investors are making a desperate attempt to define a new stock valuation model that adapts to a policy of rapidly rising interest rates and reporting expectations. We actually see that stocks are traded at lower prices with higher ratings. While most sessions in 2018 for the S & P500 have ended in a plus when the market falls, it drops a lot. Crashes within one are 14% more than average increases, which creates a big difference between the two relationships that was last seen in 2011

Since the end of August, the shares are down 5%. Although there have been only two months in which a lot of things can happen, this fall is not a good indicator of market performance at a time when there has always been a boom since we are in the bullish market. Purchases of shares and their retention between Labor Day and the end of the year generated an average return of 7.2% on an annual basis.

It is difficult for their investors to read the data from the reports and the signals sent to them by the market. Netflix Inc. announced their growth report on Monday, which boosted hopes that the FANG might rise, prompting investors to pour $ 1.9 billion into the Invesco QQQ ETF on Wednesday. Yesterday the fund fell 2.4%.

"The conditions for increasing volatility while reporting positive results for companies will remain at this time for a market that is more like a sheep than a bull." - says Gina Martin Adams, chief equity strategist at Bloomberg Intelligence. Finally, he added: "The monetary policy of tightening and the uncertainty surrounding trade policy will continue to exert pressure on tolerance risk."

Source: Bloomberg Finance L.P.

Graphs: Used with permission of Bloomberg Finance L.P

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