Sunday, October 18, 2015

Week In Review (10/12 - 10/16)

The S&P 500 added 0.46% on Friday and finished the week with a 0.9% gain.  This leaves the index now down just -1.3% year-to-date after having climbed more than 8% since the September low.  The Nasdaq outpaced the S&P on the week, adding 1.2% and now sits higher on the year by 3.2%.  Small cap stocks however, as benchmarked by the Russell 2000 index, were not able to participate in the week's gains.  The index dropped -0.3% and now sits down -3.5% for the year.

The market was lead higher by strong performance out of the Health Care (+1.93), Utilities (2.26%) and Financial (1.33%) sectors.  Industrials, on the other hand, could not keep up with the gainers as the sector was down -1.55% for the week and continues to be one of the weaker groups in the market.  Industrials are now down -5.7% for the year which leads only Materials (-7.9%) and Energy (-10.7%) in the S&P sub-groups.

As we mentioned earlier in the week, as the market has rallied from the September lows, it's done so on the back of some of the year's most unloved stocks and sectors. In an October 9th study, Bespoke took a look "under the hood" of the current rally and made some interesting observations.  Chief among them being that this rally looks a bit different than many of the recent past given that it's been lead higher by the "most unloved, beaten-down names, while prior market darlings have lagged."

And as you can see below, the first 13 trading days of October have been a total boon for the year's two biggest losers, Energy and Materials.  They're up 13% and 10.5%, respectively since the end of September.

We could be in for an interesting week upcoming as in addition to a wave of earnings reports, we get China's third quarter GDP announcement on Monday and the European Central Bank will meet and announce new monetary policy decisions on Thursday.  So we'll see what, if any, kind of volatility that mix of events throws into the market.  

This linked article from Ryan Detrick has some eye-opening stats on market performance in the month of October.  Historically known as one of the worst month's for stocks, it's actually fared pretty well over the last 20 years.

Detrick, however, does note that the month has historically featured some pretty dramatic volatility and perhaps we'll get a reminder of that over the next two weeks.

Ryan Worch is the Managing Director of Worch Capital LLC. Worch Capital LLC is the general partner of a long/short equity strategy that operates with a directional bias and while emphasizing capital preservation at all times.

Ryan on: Ryan Worch on LinkedIn, Ryan Worch on Twitter | Ryan Worch Bio