Even though the S&P 500 rallied 4% today, the average stock in the index was up 5.42%, which means the bigger companies in the index underperformed the smaller ones. We also broke the index into deciles (50 stocks in each decile) based on year to date stock performance through yesterday's close to see how prior performance this year impacted today's moves. As expected, the 50 stocks that were down the most through yesterday were up an average of 13.16% today, while the 50 stocks that had held up the best so far this year were only up an average of 3.93%. As we've seen with most oversold rallies during this bear market, investors have been bidding up the losers, only to see them suffer once again when the rally teeters out. Until there is a significant trend change, profit-taking is a must for those buying beaten-down shares on days like today.
Another Turnaround Tuesday.
Would you have the time to run a study on days of the week? It seems like there's a lot of Monday down days followed by Tuesday Turnaround days...a conceit left over from the dotcom era.
Posted by: PTDBD | February 25, 2009 at 08:51 AM