New Lows In Financials; Buy-The-Rally Is Dead, Too
-
Jason Goepfert
Published: 2018-12-12 at 11:18:51 CST
This is an abridged version of our Daily Report.
Financial troubles
More than half of the stocks in the S&P 500 Financials sector have declined to a 52-week low, the most in more than two years.
After investors have sold so many in a single sector to this low of a level, it has tended to bounce. After 26 of the days, the sector bounced back over the next week 23 times, and two of the three losses were minimal. It was less consistent over the medium-term thanks to 1990 and 2008. It’s worse overseas, where nearly 90% of Euro Stoxx Bank Index stocks hit a low in October, and there was another big drop this week.
Buy-the-rally is dead, too
We saw on Monday that the tendency for investors to step in after weakness has dropped dramatically in the past few months. So has the tendency to chase rallies. Over the past two months, there have been four days when the S&P 500 rallied at least 1% intraday only to give it all back by the close.
It’s not just Financials
Energy stocks have been faltering, too, with more than 40% at a new low. And fewer than 5% of them are above their 10-, 50-, and 200-day averages. There have been 23 days since 1990 when selling was this widespread, with a rally in the S&P 500 Energy sector over the next two weeks after 18 of them. Every one of the 5 losses was in 2008.
Overbought bonds
The BND fund is the only one in “Phase 3” meaning it’s overbought. This doesn’t happen often. It’s the first time the 10-day average of its Optimism Index was above 70 since January 2017.
Related Posts:
- Do new lows suggest capitulation
- A jump in stocks cut in half, with Healthcare bearing the brunt
- Weekly Wrap for Jan 21 - Risk-off sentiment abounds and trends are failing across the board
- A market regime indicator reversed from risk-on to risk-off
- Negative bets on the energy rally are reversing
Tagged As:
The post titled New Lows In Financials; Buy-The-Rally Is Dead, Too was originally published as on SentimenTrader.com on 2018-12-12.
At SentimenTrader.com, our service is not focused on market timing per se, but rather risk management. That may be a distinction without a difference, but it's how we approach the markets. We study signs that suggest it is time to raise or lower market exposure as a function of risk relative to probable reward. It is all about risk-adjusted expectations given existing evidence. Learn more about our service , research, models and indicators.
Follow us on Twitter for up to the minute analysis of market action.
Follow @sentimentraderNot ready to signup up for a free trial yet?
Signup for our Daily Lite email to receive highlights of our daily report, research and studies.
Follow us on Twitter:
Follow @sentimentraderSubscribe to our Youtube Channel:
RSS Feed
Subscribe to the Blog RSS feedTags
Recent Blog Posts
Brought to you by:
>