Narrow Markets are Dangerous
Submitted by Wespac Advisors, LLC on December 22nd, 2015- Of the 9 major sectors that comprise the S&P 500, only 4 outperformed the S&P 500 in 2015 — Consumer Discretionary, Healthcare, Consumer Staples, and Technology. These sectors contribute about 59% of S&P 500′s operating earnings.
- Of the other 5 sectors, 4 significantly underperformed the S&P 500, which is down about -1% YTD — Energy (-23%), Transports (-17%), Materials (-10%), and Industrials (-6%).
- Only 43% of the S&P 500 stocks are trading above their 200-day MA or their 50-day MA.
- There have been some individual stocks that have been crushed in 2015:
- Chesapeake Energy, Southwest Energy, and Consul Energy all down over -77%
- Freeport-McMoRan and Fossil Group, both down over -70%
- NRG Energy, Micron, Wynn Resorts, all down over -58%
- Seagate, Staples, Viacom, Macy’s, Kors, and Tenet Healthcare, all down over -44%
- Consider the following average performance of S&P 500 stocks (Source: Bespoke Investment Group)
- The average stock in the S&P 500 is down nearly 3% this year.
- The best 10% of stocks in the index are up an average of nearly 50%.
- The worst 10% of stocks in the index are down nearly 50%.
