Tuesday, January 20, 2009

Financials Account for Half of Loss in S&P 500 Index in Past Month

While this should come as no surprise to anyone holding bank stocks, I find it interesting to note half of the losses in the S&P 500 index over the course of the past month can be attributed to the financial sector (XLF).

The chart below shows that while financials have fallen almost 21% during the last month, the other major industry sectors have come close to breaking even. Remove financials from the equation and only industrials (XLI) have lost 3% during this period.

The market is not healthy right now, but the collateral damage inflicted by financials on other sectors may have already peaked. This is not to say the market can rally without financials, but it is becoming increasingly difficult for the financial sector to drag the entire market down.

[source: AMEX, VIX and More]


Eric said...

I have been tracking this for a few days with some concern. I noticed that Small Caps, save today, have not been participating to the downside anywhere near financials.
I was noticing the disparity this morning as I was looking at the charts for Basic Materials as well. They appear to creating a strong base down at these levels, but if not, look out below. I did notice money flow does not seem to be heavy out of the other sectors. So either the financials and the market should be bouncing here or every other sector should move down considerably.

BTW, what is the next technical VIX level on the upside? 54.92?

Bill Luby said...

54.92 is a good guess. I am looking at an area of 54.60 - 55.00 as resistance, with a big breakout being something that makes it at least to the high 56s.

This should be yet another interesting week...

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