Is This a Bull Market or Bear?

As the three sector charts indicate (Industrials, Financials, Technology), whether you view this as a bull market correction or as a fresh bear market depends largely where you're invested. If you look at a long-term chart of the Russell 2000 stock ETF (IWM), you'll see that we've retraced the entire move up since early March. The S&P 500 Index (SPY) is well above its March levels. Not all market segments are behaving the same.

If you look at five of the most highly weighted stocks within the XLK (technology) universe--MSFT, INTC, IBM, CSCO, and VZ--you'll see only the mildest of corrections.

A look at the five most highly weighted XLF (financial) stocks--C, AIG, BAC, WFC, and JPM--shows harrowing declines.

A number of consumer staples (XLP) stocks--PG, KO, and WAG come to mind--are proving relatively resistant to decline of late. Many consumer discretionary (XLY) issues--TWX and HD--are weaker.

There is a great deal of fear-based trading in the recent markets. We see huge flights to quality in the drop in 10-year Treasury yields, massive unwinding of carry trade (Yen strength, flight from risky assets), and sharp moves late in the day from participants unwinding positions. As noted earlier, we're also seeing considerable bearishness in the put/call ratios and extreme weakness in advance-decline readings.

That tells me that good stocks (and sectors) are being sold off with the bad, and that has me patiently looking for values. One of the places I'm looking is sectors (and stocks) that--even with massive selling--are holding their valuations, staying off my list of fresh 65 day lows.

This is not a monolithic bear market.

It just feels like it.