Over the past six weeks, the broad stock indices — such as the S&P 500 and Nasdaq 100 — have given up their year-to-date gains, and are now off about 10% from their 52-week, putting them in ‘correction’ territory.  Will it turn into a bear market?

While the technical definition of a stock market correction is considered a 10%, and bear market is a 20%, one could make the case that the U.S. has not only experienced the former, but are already teetering on the latter.

The fact is that over 300 of the S&P 500 stocks have been down by 20% or more over the past six months. The only thing keeping the indices up has been a rotation from one sector. Essentially, we’ve had a rolling bear market beneath the surface as selling moved from housing to semiconductor to energy to industrials to retail and most recently, the large cap FAANG.

In the global context, we can consider the U.S markets recent decline as a similar “retreat of the general.”

In prior articles, we’ve highlighted the year-long weakness in stocks around the world and wondered whether they would play catch up to the U.S.  Over the past few quarters, we started to get a sense that something was wrong.

We did not see the rotation come in like we had seen so consistently after any sector went through a period of underperformance. Rotation is the lifeblood of a bull market. Money did not flow back into foreign markets, and as it turns out, the U.S. was truly the last man standing.