As we highlighted in yesterday’s Chart of the Day as well as in our Sector Snapshot, the S&P 500’s 10-day advance decline (AD) line reached a record low at yesterday’s close.  The 10-day AD line essentially measures the percentage of stocks in the S&P that have risen or fallen on a daily basis over a 10-day span.  While the broad index saw its 10-day hit a record low, it was not alone. Real Estate (which admittedly has a smaller history of data only going back the past six years) and Technology also saw record low readings while a number of other sectors came close to records as well.  As shown below, Materials had the fourth lowest reading, Energy and Industrials had the third lowest, and Health Care had the runner up lowest reading on record. For most sectors, these are readings that are well over 3 standard deviations below the norm since our data begins in 1990.

Additionally, the weak readings are somewhat unusual when compared to other bear markets.  As shown, historically the 10-day AD lines of defensive sectors (Consumer Staples, Health Care, Real Estate, and Utilities) as well as Energy have averaged positive readings during bear markets. That is far from the case at the present moment with the strongest reading coming from Consumer Staples, however, even that reading is over 2 standard deviations lower than normal and ranked as the 121st worst reading of all trading days since at least 1990.

Pivoting over to a longer run look at breadth, the cumulative AD line has been confirming the moves in price with the line plummeting down towards the spring lows.  That comes after the AD line went on a much stronger run than price during the late spring/summer rally.

Once again comparing the breadth line to past bear markets, below we show the path of the cumulative AD line over the course of each bear market since 1990.  At the moment, the current bear is the third longest in terms of time, but the cumulative AD line is not quite at as low of a level as other bear markets. For example, the 2020 bear market as well as the 2007 to 2008 bear markets saw much lower readings and consistent moves lower than has been observed this year. At the highs this summer, the line even managed to move into positive territory.  Click here to learn more about Bespoke’s premium stock market research service.

Bespoke Investment Group, LLC believes all information contained in this report to be accurate, but we do not guarantee its accuracy. None of the information in this report or any opinions expressed constitutes a solicitation of the purchase or sale of any securities or commodities. This is not personalized advice. Investors should do their own research and/or work with an investment professional when making portfolio decisions. As always, past performance of any investment is not a guarantee of future results. Bespoke representatives or clients may have positions in securities discussed or mentioned in its published content.

The average stock in the Russell 3,000 was down 41.7% from its 52-week high as of the close yesterday.  That means the average stock would need to rally 71.5% from here to get back to its high.  It’s much worse in some sectors, though.  As shown below, four sectors have average prices roughly 50% below their 52-week highs.  Communication Services is at -51.8%, Consumer Discretionary is at -49.8%, Tech is at -49.4%, and Health Care is at -48.4%.  Even Energy stocks are 36.9% below their 52-week highs.  Click here to learn more about Bespoke’s premium stock market research service.

Below is a look at the stocks that have seen the biggest drops in market cap since the end of 2021.  Across the entire Russell 3,000, we’ve seen more than $13 trillion in market cap erased, and there have been five individual stocks that have seen their market caps fall by more than $500 billion — Microsoft (MSFT), Alphabet (GOOGL), Meta (META), Amazon (AMZN), and Apple (AAPL).  There have been 18 stocks that have seen market cap fall by more than $100 billion, including names like Tesla (TSLA), JP Morgan (JPM), Home Depot (HD), Nike (NKE), Intel (INTC), and Cisco (CSCO).  Five of the names on this list are down 60% from 52-week highs: META, NVDA, NFLX, ADBE, and PYPL.  This is just true carnage in equities unlike anything we’ve seen since the Financial Crisis or the Dot Com bust.

If you want to see even more pain, below is a list of Russell 3,000 stocks with market caps still above $2 billion that are down more than 75% from their 52-week highs.  These stocks collectively add up to just $300 billion in market cap at this point, and their market caps are down about $680 billion since the end of 2021.

Carvana (CVNA) and Peloton (PTON) are the only members of the “down 90%+” club, while stocks like Affirm (AFRM), Wayfair (W), RingCentral (RNG), Unity Software (U), Roku (ROKU), and Teladoc (TDOC) are down more than 80%.  The list below is basically a “who’s who” of widely-traded growth stocks that saw huge gains post-COVID only to give it all back over the last year.

As noted in our Morning Lineup today, 2022 has been the year with no safety in US Treasuries.  The declines this year have been painful and persistent.   With the BofA 10+ Year US Treasury Index already down 7% this month, September will be the eighth month this year that long-term US Treasuries have had a negative total return, and there are still three months left in this miserable year!  Even if they don’t have another down month this year, 2022 will be tied (with several other years) for the largest number of down months in a calendar year going all the way back to at least 1978.

On a rolling 12-month basis, the current backdrop is even more extreme.  September will be the ninth month in the last twelve that long-term Treasuries were down, and that’s tied with October 1994 and August 2013 for the most in a twelve-month window.  Furthermore, if either of the next two months are down, the rolling twelve-month total will move up to a record of ten. Click here to learn more about Bespoke’s premium stock market research service.