Hidden Correction

I know in the past couple of weeks there's been a lot of hoopla over the S&P 500 crossing the 2000 mark for the first time.  Have you seen anybody talking about how much stocks are up since the 4th of July?    I haven't.  That's probably because the S&P's up less than a third of a percent since then.  In the last two months the index has gained about 7 points.  There was a 4% decline in early August from which we've seen a nice recovery, but that seems to have stalled out since then.

Bespoke Investment Group was out with some interesting statistics that show that many stocks have actually been in a hidden correction.  They show that:

-The average stock in the S&P 500 is down 7.5% from its own 52 week high.

-The average stock in the S&P 400 Mid-Cap index is down 11.1% from its own 52 week high.

-The average stock in the S&P 600 Small-Cap index is down 17.3% from the same.

-Overall the average stock in S&P 1500 is down 12.4% from the same.

By their work, here's a chart of the average decline in the same period by sector.

  

That the major averages have held up better than this is a bit worrisome as it likely suggests that the market's rally has been narrowing to a handful of leaders.  That's a trend we'll have to watch in the coming weeks.  Remember we're still in the statistically weakest period of the year for stocks.

*Long various indices via ETFs that represent this different sectors of the markets above in both client and personal accounts.  Please note that these positions can change at any time.

Link:  Bespoke, "Average Stock Declines from 52-Week High"