Is Alpha becoming Beta?
That seems to be the case lately, with a very high correlation between stocks.The WSJ noted the sync between individual names in Component Stocks’ Correlation to S&P 500 at Highest Level Since ‘87 Crash.
Hence, it is not really a “stock pickers market,” as so many know-nothing pundits are trying to tell you.
Jim Bianco blames “Macro Investing” — between ETFs, program trading, and other factors, this leads to increasing degrees of correlation.
I think its more of a sign of indecision, and traders sitting on their hands.
Here is Jim’s chart, showing the correlation between 6 other markets that are trading like SPX:
click for bigger chart
chart courtesy of Bianco Research