Regardless of volatility or whether the market went up or down over a given week, I usually do not notice anything out of the ordinary.   It’s always tough, so a particularly rough week does not confuse me or rise to the level of concern.

There have been less than 5 weeks in the past 6 years I have been doing HEDGEfolios that I saw something I have never seen before.   On those occasions, I made mention of them on the blog and said that I had no idea what they meant at the time, but I was watching them to see what happens so I’ll recognize it if the situation ever reappears.

This weekend looking at the charts and doing my fundamental work was one of the 5 weeks of confusion.  In fact, if I had to rank them, this was the worst.

Stocks that looked great for months, now look like crap.  Stocks that looked strong last week, now look like crap.   Stocks that had started to find support or head higher, now look like crap. In summary, the top fell out and the bottom fell out at the same time.  Strong stocks got weak, and weak stocks got weaker.

I am not a supporter of the capitulation theory that says you need to see a capitulation to find a bottom.   Commentators like Pisani have mentioned the “C” word almost every time they want to call a bottom and they have been wrong.   So since I don’t call bottoms or crashes or capitulations or things like that, I am not suggesting last week was a capitulation.   I am not suggesting that we are set up for a crash.  All I am saying is that I have never seen anything like it.

Of the 1443 UP signals I had going into last week, 669 of them declined by more than 10%.  It is rare for me to get hammered like that.  Of the 1910 DOWN signals I had going into last week, 1026 declined by more than 10%.  More than half the stocks I covered declined in excess of 10%.  If you are an optimist, you might want to call this a capitulation event.  I just call it devastating and since many of these stocks just started to fall last week, I have a tough time assuming that the slide began and ended that quickly.  What catalyst do you see for a positive reversal?  Another $700 billion government bailout?  Another Fed rate cut?  A bottom in housing?   Strong retail sales?  A great earnings season?

The S&P 500 declined about 9.4% last week.  Many people commented about how bad this was.  Usually when they say stuff like this I think they are exaggerating or maybe I even see the opposite.   This time though…IT WAS SO MUCH WORSE IN MY OPINION.