Yesterday's Declines Led by Prior Winners

The Russell 1,000 was down 1.73% yesterday.  We broke the index into deciles (10 deciles of 100 stocks) based on stock performance during the current rally to see which ones led the declines.  As shown in the first chart below, the decile of stocks that were up the most from the 3/10 bottom through 5/6 were down the most yesterday, signaling that investors were simply taking profits in winners.

As in most rallies, stocks with high levels of short interest have been strong performers during the current rally.  We also broke the index into deciles based on short interest as a percentage of float to see if highly shorted stocks led the declines yesterday.  As shown, the decile of the most heavily shorted stocks was down the most yesterday, while the deciles with lower levels of short interest held up better.