The 2014 Market "Correction" As Seen Through the Lens of Various Exchange Traded Products

The "correction" is in quotation marks because:
a) it really isn't one and
b) because we are close to the point where every half-assed scribbler is going to write about the NASDAQ entering "correction" territory and then use a hundred or so words of boilerplate "typically defined as..." where no one knows who came up with that nonsense but I tell you it wasn't anyone I learned from.

Back in my day we had Panics, not this "correction" stuff.

Come to think of it, I believe we started seeing the "correction" folderol hit the mainstream after the Panic of '87. Prior to that we had bull and bear markets with the occasional corner or squeeze thrown in to get the old-timers to wake up. Correction? hah, I laugh in the face of "correction."

From VIX and More:
The Correction As Seen in the ETP Landscape

Since stocks bottomed in March 2009, I have periodically been publishing an SPX pullback table and occasionally a plot of all those pullbacks and their duration. The recent selloff in stocks, however, has been anything but an SPX pullback. I toyed with the idea of presenting comparable data for the NASDAQ Composite or NASDAQ-100 Index (NDX), but here again, the selling has been disproportionate in some areas of the NASDAQ universe, even though it has been hit harder than the SPX.

This time around I have opted instead for a chart that shows the peak-to-trough drawdown across the equity ETP universe, focusing on sector groups that I believe are among the most important to watch.

(Click to Enlarge) [source(s): Yahoo, VIX and More]

The data above cover only 2014 and indicate the maximum drawdown since the 2014 peak. While many of these maximum drawdowns are from earlier today, there are quite a few instances in which the maximum drawdown was established earlier in the year.

Note that while the NASDAQ gets most of the attention, it is the small caps (IWM) that have suffered the most among the major market index ETPs....MORE