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“There is a crack in everything, that’s how the light gets in.” – Leonard Cohen

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

While the S&P 500’s price remains above its 50-day moving average (for now at least), its 10-day advance/decline line has moved into oversold territory for the first time since the April tariff tantrum.  This is indicative of an oversold market in the short-term, even though price looks neutral on the surface.

Futures are trading lower once again this morning as the bears have taken control.  So far this month, the year’s biggest winners have been hit the hardest, but those are also the names with the most lofty valuations.  Below are decile charts showing the performance of Russell 1,000 stocks month-to-date based on price-to-sales and price-to-earnings ratios.  Decile 10 in each chart contains the stocks with the highest of these two valuation metrics.  Stocks in the decile that contains the highest price-to-sales ratios are down an average of 3.6% this month, while stocks in the decile that includes the highest P/E ratios are down 4.8%.  Other deciles aren’t down nearly as much.