Mike Panzner points out that the bull has become two-horned , as laggards become leaders in recent days. Once the S&P 500 reached a new multi-year closing high of 1326.57 on 9/26 (beating the prior peak of 1325.76 that was reached on 5/5), the sector laggards began to play catch-up.
S&P500 Sector Performance
past month versus prior 3
Source: Michael Panzner, Collins Stewart
One theory: fund managers who had sat out the first phase of the bull
run scrambled to invest in stocks and sectors that had trailed behind,
in an effort to keep up.
This chart shows how the pre-9/26 sectors have fared, and how the markets have run since then:
||6/13 – 9/25||
||9/25 – 10/24||
Interesting stuff. Thanks, Mike.
This was part of the reasoning behind the rise in dot-com stocks during the bubble then. An analyst would say, seriously, “well, Yahoo’s shares went up 10% last month, but Excite’s only 5%, so it’s a good bet Excite will now rise faster to catch up…” And, lo and behold, they would! ;-)
What’s driving the uptick in telecoms? I work for one & for the life of me, I can’t figure out what’s driving up their stocks….
BTW: Any chance of BR sharing his thoughts with us on the ATT/BLS merger? (If that’s been done, could I get a link?)
Is there any historical evidence that suggests that a correction maybe imminent when laggards out perform leaders.
Keep up the good work. The “slight” hint of bearishness is needed to balance out the irrational exuberance in the mass media, as it about the only thing that prevents us from being a bunch of lummoxes.
Is Barry becoming bullish with such a statement.
“One theory: fund managers who had sat out the first phase of the bull run …”
First phase of a bull run???????
Barry had a late announcement about Nouriel Roubini being the first bear on the street; which puts Barry from first place to second!
Then now, he slowly introduces himself as the man of the second bull move. Doesn t he?
You are a keen man Barry.
“Sat out”, Barry!
You certainly did during that “sucker’s” rally of yours!
The S&P is not all that much above its 2004 levels even in nominal terms. It’s nice little run up, but I’m not sure it deserves being called a “bull market.” Seems like fairly sane late business cycle activity where you would expect the large caps to do well.
A more moderate run up at the end of the cycle (compared to 2000) hopefully would allow for more of a soft landing scenario. With the situation in real estate we can use all the moderating factors we can get.
This is just like the San Diego housing market in 2004. All the players flush with cash, all knowing that things will not stay this way forever and that they really should not by any right be this good, and all eager to get what they can while the party’s still going. And that’s not just a general comparison- I know a handful of people who were “real estate developers” in 2003-2005 in San Diego are now paying very close attention to their stock market plays. Real estate? That’s so last year…
Fill in the blank- The market ___________ a wall of worry.
Quit kidding yourselves, this type of rally we’re experiencing is not unprecedented, take a look at whats happened each time in the past that the fed has stopped raising rates. 5.25% fed funds is the peak in this cycle-
I think I have Bernanke pegged…. he is a deflation hawk. The helicopter story really was accurate.
The more I think of it, I wonder if Bernanke has been calling the shots all through the bubblemania. Maybe that dottering fool Greenspan let the copter train for the new job, student driver kind of thing.
The copter seems to be unfazed by serial bubbles in housing, commodities, and now stocks. There are some wild claims going around that the fed has been pumping liquidity into the economy through below market rates to their friends at the speculator banking establishments. You know, the ones making their money by “trading”.
The copter’s attitude seems to be “Maybe inflation will be down next month. If not, who gives a rat’s ass.” I just wish he would be a little more “transparent” with us yokles.
The S&P has risen now for 6 days in a row. Quite often the first down day after a series of 4 or more up days signals the end of an intermediate trend. Check the Dow in May. It certainly looks like we’re getting the manic phase now. I would feel more comfortable about this rally if it was actually climbing a wall of worry. With the Vix in the basement and the market moving up every day I dare say the outcome is probably not going to be pretty. Soon or later the big money is going to come to their senses and start selling and then I suspect this parabolic rise will end like all parabolic rises do, in collapse. Alas we learned nothing from the bursting of the tech bubble and the housing bubble. Oh I almost forgot the housing bubble wasn’t really a bubble and it’s only experiencing a minor correction. Wait a minute wasn’t that the popular mantra in 2001 and 2002 as investors watched billions of dollars evaporated.
If you recall, Roubini did mention that the markets should rally, albeit a “Sucker’s Rally” until his recession shows up in the beginningh of next quarter.
The Consumer Staples sector doesn’t tie between the two charts. The bar chart reads that Staples was the 6th best performing sector from 6/13 – 9/25 which ties to the table below. However, the bar chart then reads that from 9/25 – 10/24 it was the best performing sector while the table below shows that it was the worst. Which is it? The worst or the best?
Secondly, the bar chart shows Telecom performance from 6/13 – 9/25 was almost 10 units of something but the table shows its return in that period was 15.63 (presumably percent?).
I was pretty interested in these graphs to the point of printing them out but now they seem worthless. Anyone have some insight on this?
Sorry, took me second. The scale on the barchart is the ordinal 1-10 ranking, presumably done to better show the discrepancy between the two periods for each sector.