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In the Tarantino Market, the Hottest Stocks Are Getting Quietly Killed

Turmoil under the surface of the S&P 500 is reminiscent of the quant crisis.

“Say '500x multiple' again. Say '500x multiple' again, I dare you.”

“Say '500x multiple' again. Say '500x multiple' again, I dare you.”

Photographer: Gabriel Bouys/AFP/Getty Images

Whisper it softly, but there’s something going on beneath the surface of the stock market.

While concerns around the spread of the omicron variant ostensibly helped whipsaw equities in recent days, there were strange moves happening even before worries over the new variant burst onto the scene late last week. Growth stocks, meme favorites and other companies beloved of retail investors or hedge funds had seen their share prices melt despite the overall S&P 500 remaining relatively stable.

It’s what Peter Atwater, president at Financial Insyghts LLC, has called the “Tarantino Market.” While everyone has been focused on the party going on in the front room, he says, no one’s been paying attention to the fact that star stock after star stock is being taken out back for elimination.

For others, the price action is reminiscent of the quant quake which rippled through markets in 2007 as investment factors crumbled and resulted in broad-based hedge fund trauma. The question is whether the recent weakness in single-name stocks might end up infecting the wider market, or be a sign of more pain to come.

“The bodies have piled up so deep and among so many crowd-favorites that folks can no longer step over the problem,” says Atwater. “Below the surface of the broad indices, there is deep trouble.”

Many of these stocks have been snapped up by retail investors betting on further inflows, or hedge funds who decided to join in after missing out on meme stock mania earlier in the year.