It shows the % of Stocks Above the Key Support level of the 200 day moving average - a key level for technicians. This looks to be a historical chart going way back (since there are not years labeled on the chart) but it goes back to when the S&P was valued in the 200s. Without exact dates I am not sure exactly which spike down corresponds to each date but it appears we are levels not seen since the worst of 2002, the worst of 2001, and the worst of 1987. EDIT: Reader points out that huge spike early in the chart was 1987 as the S&P 500 was in the upper 200s in early 1987. So it looks like we are still doing better than 1987, and a bit better than the early 90s correction in stocks, but now we are in line (or perhaps a bit worse) than 2002, and 2001.
So in a word it's bad out there. (I assume that huge spike down at the beginning of the chart were during the 1930s - obviously Great Depressions are not times to be investing in stocks)
(click to enlarge)
Essentially 8 out of every 10 stocks are now "broken", below their 200 day moving average. This is a level where you'd typically sell off a stock as its broken all long term support. But obviously this means you'd be left with almost nothing to hold, which for example a mutual fund cannot really do. But for independent traders or hedge funds; they will usually clear out of a stock once it's broken this level. For those who have been reading a while you know I get itchy to sell when a stock breaks even its 50 day moving average as this usually portends further weakness. But within the confines of this fund, selling when a stock breaks this level would of left me with 1 stock, Illumina (ILMN) ; ironically the 3rd most expensive stock I own (P/E Ratio for Portfolio). Just another example of how its hard to game this market - why something of such high value remains impervious is beyond me.
Obviously a 95% cash with 1 stock portfolio would really not work in the confines of running a mutual fund. But for "FundmyHedgefund.com" perhaps.
So I was curious how the % of the portfolio was holding up.. if the overall market is about 20% what % of long positions in the fund are above their 200 day moving average?
Here are the symbols (out of 52 long positions, I am including CNH Global as a position since I held it entering the day)
(note, going into today both AAPL and CNH held this distinction but no longer)
AG
ATW
BIDU
BLK (just under 50 day and holding like a rock)
CBI
CF
CNX
DO
FCN (just under 50 day and holding like a rock)
FSLR
FWLT
HDB
HOGS
IBN
IFN
ILMN (over 50 day)
JEC
MA
MEE
MELI
MHS
MICC
MOS (right near 50 day)
MTL
PBR
POT
RIMM
SLW
SOLF
STP
A few names were too young (recent IPOs) to have 200 day moving averages so I could not tell where they stood. So above we have 30 out of 52 names or a 58% exposure to stocks over the 200 day moving average. Keep in mind aside from AAPL and CNH we also lost GOOG and CLB today - all 4 breaking below this key level in morning trading. So yesterday, this analysis would of shown 34 out of 52 names (65%). How quickly it gets worse...
A half full type of person would say that's a pretty good %, and despite a horrid few weeks, these stocks in the fund have held up better then the market as a whole, by almost 3:1 margin
A half empty type of person would say, well this just gives these stocks more room to fall to catch up to the rest of the market
3 comments:
If it is my personal account, i would sell all last thursday when tripple bottom on spx did not hold, and from here on out, just trade the index, up and down. No individual stock. Right now, so many trader looking for the retrace so they can short, i anticipate the bounce will be weak and short life.
"(I assume that huge spike down at the beginning of the chart were during the 1930s - obviously Great Depressions are not times to be investing in stocks)"
That huge spike down was 1987. The chart appears to start at approx. 1985.
Thanks Alex, dead on there. SP 500 was 275 in Feb 87. I'll edit that entry
Hmm, I wonder what it looked like in 1931 :)
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