I'm trying to understand why, when there was the recent big market down move, commodities and supposedly recession-proof stocks went down just as much, or worse (utilities etc.). I'm able to find this in other cases on historic charts. Are people worried they won't be able to sell those products and that's why there's a run on them?
Why did everything go down together?
- Thread starter Radiohead
- Start date
Concentration of capital in a few hands. Big players got out of the market at the same time to keep everything safe in cash. Those moves generated trends that were followed by the rest.
I guess the same question could apply to those big players. Why would they believe that commodities and "recession-proof" stocks wouldn't be safe? Is it because of overall market volatility and they just would rather sit it out?
I guess any small signal would create waves of massive fear when there's so much capital involved, if they see any risk arising they will not hesitate to keep everything safe as a first measure. But I don't know, it is just a guess.
When "they" get into "risk off" mode, they sell almost everything at once. Sometimes a sector or two will survive the decline "for a while"... like oil at this time.
However when we get into a genuine bear market, almost everything will be tanked... some worse than others... and not all at the same time... there will be no "safe haven" other than cash and T-bills/equivalents... not even gold. At least that's how it has played out in the past.
Well, at least this might help with inflation haha. Cash goes up in value
Yes! Cash has been in its own bull market... have you noticed?
Algos, index funds, automated trading can all move everything in the indexes short term. It does however often create opportunities to counter.
I wouldn't call it "fear" when markets move 1-3%.
I'm trying to expand my horizons and work on diversification and understanding broader forces in world economics. Up until very recently, I was only trading ES/NQ with a narrow focus on those charts