In the spirit of choppiness and uncertainty, we saw significant divergence yesterday in 2 of our indicators that we considered worth sharing.
First, we had 23 stocks in our universe up 50% or more in yesterday's session however all but 2 were in the healthcare/biotech space. Out of that 23, 20 were strictly biotechs. This is a level that, historically, has proven to show the market is overheated in the near-term. If we look back at the data since the beginning of 2012 we see that in the short-term (5, 10, and 20 days) the results show little price progress versus when we are not at overbought levels.
|50% Up > 20||-0.16%||-0.29%||0.34%||2.29%|
|50% Up < 20||0.37%||0.90%||1.68%||3.77%|
With current headline risk (currency market fluctuations and monetary policy announcements) making conditions ripe for wild daily volatility, many of our indicators are flashing the conflicting signals you might expect. We're content playing light here while waiting for some more definitive evidence.