15
Nov

Wrap – Week Ended 11/13/09

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3 Responses to “Wrap – Week Ended 11/13/09”

  1. 1
    BirdsofpreyRcool Says:

    From Market Strategist —

    Slow Going.

    By our calculations, this past week was the slowest week of 2009. With only 7 trading weeks left in the year, investors are stepping back in order to close out 2009 and prep for 2010. After two extremely volatile years, the active trading hedge fund community is likely positioning/hedging to lock in this year’s gains. Looking at the equity markets from the perspective of the risk trade, one can see this developing. Theoretically, the risk spectrum in the broad equity indices is as follows, Dow Industrials, S&P 100, S&P 500, S&P 400 Midcap, Russell 2000 – from the bluest of blues chips representing “quality” to the most aggressive of small caps representing “risk.” Up 29% for the year, the S&P 400 has been the best year to date performer among those indices. The benchmark S&P 500 is up 21%, while the Dow, the S&P 100 and Russell 2000 are up 17%.

    Putting 2009 to bed.

    When you look at the broad indices, with the exception of the divergence between the S&P 400 Midcap and the S&P 600 Smallcap, the performance among the others appears consistent. Since September, a shift has been occurring. This past week, the Dow, the S&P 100 and the S&P 500 all recorded new 52 week highs. Neither of the “risk” indices, the Russell 2000 nor the high performing S&P 400, accompanied these larger indices in recording new highs. As a matter of fact, the S&P 400 recorded its 52 week high on October 19th and the Russell 2000 recorded its on September 23rd. Back in September, the S&P 400 and the Russell 2000 were outperforming the S&P 500 for the year by 12.9% and 5.6% respectively. The S&P 400’s lead has diminished to 8.7% and the Russell 2000 is now underperforming the S&P 500 by 3.7% (see chart). At the same time, the “quality” indices, which have been underperforming most of the year, especially since the March low, have begun to close the gap of their underperformance versus the S&P 500. We believe these are signs that investors have been reducing their risk profile in order to reduce exposure and lock in some 2009 profits. It also provides them with flexibility to react to situations as they develop going into year end and setting up for 2010. While this is anything but a typical year, if typical seasonal trends prevail, then investors will probably be buying risk assets again in the first half of December, looking for a January effect going into year end.

  2. 2
    bill Says:

    are we live for monday

    devon selling assets

  3. 3
    zman Says:

    Not yet, working on it.

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