*hypothetical* correction vs black swan event
With a run-of-the-mill correction, I believe the indices will check back to their 200-day moving averages, which for the QQQ, SPY, and DIA are 351.81 (-11.34%), 424.98 (-9.01%), and 344.41 (-5.27%) respectively.
So based on the technicals, the QQQ is the most overstretched, followed by the SPY and then the DIA. The QQQ is susceptible to higher interest rates making certain investors less attracted to the very risky assets. The
US10 has been rising.
Dow Avg Div Yield: 2.23%
SPX Avg Div Yield: 2.00%.
As the 10-yr rises and surpasses 2%, the QQQ will see the worst of it, the SPY the second-worst, and the DIA the least bad.
In the case of a black swan event, god forbid China invades Taiwan, we could see something like this if they checked back to their 200-week moving averages.
QQQ to 239.11 (-39.02%)
SPY to 327.96 (-30.16%)
DIA to 280.97 (-22.71%)
In this instance it would be the same, the most richly-valued tech stocks would feel the brunt of it, the general market (represented by the S&P will take a heavy hit), and the top 30 blue-chip stocks (as decided by Dow Jones) will see something only slightly worse than a 15% correction.
*PURELY HYPOTHETICAL*
Full disclosure, I opened up small positions in SQQQ, SPXS, and SDOW.
So based on the technicals, the QQQ is the most overstretched, followed by the SPY and then the DIA. The QQQ is susceptible to higher interest rates making certain investors less attracted to the very risky assets. The
US10 has been rising. Dow Avg Div Yield: 2.23%
SPX Avg Div Yield: 2.00%.
As the 10-yr rises and surpasses 2%, the QQQ will see the worst of it, the SPY the second-worst, and the DIA the least bad.
In the case of a black swan event, god forbid China invades Taiwan, we could see something like this if they checked back to their 200-week moving averages.
QQQ to 239.11 (-39.02%)
SPY to 327.96 (-30.16%)
DIA to 280.97 (-22.71%)
In this instance it would be the same, the most richly-valued tech stocks would feel the brunt of it, the general market (represented by the S&P will take a heavy hit), and the top 30 blue-chip stocks (as decided by Dow Jones) will see something only slightly worse than a 15% correction.
*PURELY HYPOTHETICAL*
Full disclosure, I opened up small positions in SQQQ, SPXS, and SDOW.
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