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Despite the beating that many momentum leaders took on Monday, the major indexes are still hovering near all-time highs.They say that bull markets correct through sector rotation. This has certainly been the case this year:
Over the past quarter, we had 65 stocks that went down >50% (mostly energy names) and 22 that went up >50% (mostly biotech). This is an almost 3:1 ratio. Then, it should not be a big surprise that the iShares NASDAQ Biotech (NASDAQ:IBB)/SPDR Energy Select Sector Fund (ARCA:XLE) ratio is up 50% since August.
For the past 6 months, we have 227 liquid stocks down 30% or more vs 246 up 30% or more. For the same period, the S&P 500 is up 7% without counting its dividends. This is what a call a low-correlation market of stocks.
2014 has been the year of large caps
After gaining 37% in 2013, the Nasdaq 100 (PowerShares QQQ (NASDAQ:QQQ)) is up another 20% YTD.
173 of the S & P 500 stocks are up more than 20% YTD. This is more than 1/3.
In the same time, Russell 2000 (iShares Russell 2000 Index (ARCA:IWM)), which represents small caps, is down for the year.
Typically, large caps start to outperform in the late stages of a bull market.
2014 Has Been the Year of Biotech, Semi-conductors and Cheap Oil
We have 155 stocks that are up more than 50% YTD. More than 1/3 of them (61) are biotech, drug manufacturers and medical supplies stocks. There are 18 semi-conductors. There are 8 airlines, 3 restaurants and 3 truck stocks belonging to the group.
115 stocks are down more than 50% YTD.
For the statistics I used stocks, currently priced above 3 and trading over 200k shares a day, which is an universe of 2500 names.
Disclosure: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
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