It was a terrible day for the stock market. The broad market indexes all dropped 3% or more on concerns that the global economy might not be doing as well as people had thought. It’s amazing how quickly sentiment can change!
When stocks were going well, the areas that were leading were the Banks, Energy, and Commodity groups. These are all areas that would benefit from a growing global economy. These are also the areas that have been hit the hardest during the current pullback. High RS stocks have held up much better than the laggards over the last week or so. Today’s performance showed a huge spread between the High RS stocks and Low RS stocks:
The top 6 deciles all outperformed the equal weighted universe. The real damage was done in the bottom decile - 277 bps worse than the average. When you break the universe out by decile and industry group you get a clear picture of where the real damage came from:
The Materials, Energy, and Financials stocks from the bottom decile got hammered today. Energy stocks from our bottom decile were down over 10% on average.
Technology stocks as a group had marginal outperformance today. QQQQ and SPY were down about the same amount, but in out equal weighted universe Technology outperformed by about 20-25 bps. This outperformance is certainly not earth shattering, but what I find interesting is that Tech did well during the rally and seems to be holding its gains better than some of the other leading groups. Even the bottom deciles in Technology performed OK today.
