Stocks, Sectors In Correction; Nasdaq's Bad Day; S&P Negative YTD; Spike In Pessimism
-
Jason Goepfert
Published: 2018-10-25 at 10:29:39 CDT
This is an abridged version of our Daily Report.
Stocks in correction
The S&P still hasn’t suffered a correction, if we define it by a 10% decline from a 52-week high. With the severe loss on Wednesday, it has just barely missed the cut. Most of its stocks haven’t been so fortunate, however. With the selling over the past couple of sessions, more than 75% of stocks in the S&P 500 are now down more than 10% from their highs of the past year.
While by definition that happens before a bear market, by the time this many stocks fell this far, the S&P usually showed a positive return 3 months later.
Sector corrections
Half of the major S&P 500 sectors have also fallen into corrections. Looking at times when half of them fell this far and comparing the ones with the most similar sector leadership/weakness, future returns were decent. Returns were worse when it was different sectors that were sinking the most.
Nasdreck
The Nasdaq dropped into a correction for the first time in two years, almost always leading to rallies. It also suffered its worst loss in 7 years, which had a much more mixed record.
Negative YTD
The S&P 500 spent most of the last six months with a gain for the year. This is a late time of the year for it to sink into a negative return year-to-date.
Spike in pessimism
More than 40% of our indicators are showing excessive pessimism. Many of those are “dumb money” gauges, with Confidence reaching a low level.
We haven’t seen this kind of combination of extremes on many days since the 2009 bottom, but that’s to be expected. There were a total of 43 days when the S&P was within 20% of a 52-week high, after which the S&P rallied 40 times (a 93% win rate) over the next 1-2 months.
Related Posts:
- Weekly Wrap for Sep 24 - The Ends of Momentum Streaks, Panic-Level Breadth Washouts
- This Sector is Seeing Panic-Level Selling Pressure
- Industrials Are Nearing a Historic Washout, Too
- Did Tech Just Give Another Buy Signal?
- Selling in Hong Kong Nears Panic Proportions
Tagged As:
The post titled Stocks, Sectors In Correction; Nasdaq's Bad Day; S&P Negative YTD; Spike In Pessimism was originally published as on SentimenTrader.com on 2018-10-25.
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:
>