The US stock market just can’t seem to catch any love. Fear indexes are ramping higher and investors are looking for excuses to exit the market. Greece, rising interest rates, valuations, the FED, China stock market crash, oil prices falling off a cliff, the wall of worry is getting higher each day. How is it with all of this as a negative market backdrop stocks can be within 2% of all-time highs? All you have to do is look under the hood and while the indexes are still holding up, the average stock is struggling.
Some stats may help explain (data provided by Ryan Detrick, CMT) -
· More than 120 of the 500 SP500 stocks are down more than 20% from 52 week high
· The average SP500 stock is down more than 14.5% from 52 week high
· Just slightly less than ½ of the SP500 stocks have prices below their important long term 200 day moving average
· Just under ½ of the SP500, 232 stocks, are in a death cross (50dma has crossed under 200dma)
o The best sector is health care where less than 13% fit
o At 80%+, energy and utilities are bringing up the rear.
· The Dow has been in a 6.4% trading range (from high to low) since the beginning of the year. This is the lowest year on record.
· The Dow was down the first seven of eight days in August, worst start to a month since down seven of eight in July ‘12.
As you can see while the overall index is doing ok, about half the stocks are either struggling or hurting. Maybe this is why it feels so bad. As Yoda would say “A precarious time in the markets, we have”. Until this gets resolved, sitting on your hands and doing nothing will likely be the most profitable strategy.