Sector ETFs Continue to Move as a Pack
September 16th at 4:45pm by Tom Lydon
For S&P 500 stocks, it’s follow the herd.
During the heightened volatility over the summer months, individual U.S. stocks and sector exchange traded funds have been moving in lockstep in what the Bespoke Investment Group calls “all or nothing” days.
“We consider ‘all or nothing’ days in the market to be days where the net daily advance/decline reading in the S&P 500 exceeds plus or minus 400,” according to Bespoke. [Stock ETFs See Extreme Advance/Decline Ratios]
Year to date, 38 days have shown a net A/D reading above positive 400 or minus 400, and the firm projects we will see 54 all or nothing days by the end of 2011.
The frequency of all or nothing days has picked up since May and hastened in August after Standard & Poor’s downgraded its triple-A rating on U.S. debt. As of Aug. 8, 16 all or nothing days have been recorded, according to Bespoke.
U.S. sector ETFs are moving in lockstep to a degree not seen since the credit crunch in 2008 as markets remain unable to shake fears over Europe’s sovereign debt crisis. [Sector ETF Correlations Highest Since Financial Crisis]
Source: Bespoke Investment Group
For more information on the broader markets, visit our S&P 500 category.
Max Chen contributed to this article.
