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Stocks Below Pre-COVID Highs – 5/18/22

Last week, we outlined the percentage of stocks in each S&P 500 sector that had fallen below their pre-COVID highs to show that many of the stocks that surged due to pandemic effects have significantly fallen off, netting long-term holders a negative return since the onslaught of the pandemic. (Read it here.)  Yesterday, the S&P 500 fell by over four percent to set a new 52 week low, breaking the 4,000 level. The index is still up over 15% relative to its pre-COVID high, but as of yesterday’s close, 41.2% of S&P 500 members were below their respective pre-COVID highs, as 26 members crossed below this critical level yesterday.

Notably, six of the 32 S&P 500 consumer staples stocks crossed below, moving the percentage from 28.1% to 46.9% on the back of weak earnings reports from Walmart (WMT) and Target (TGT). 66.7% of Communication Services stocks and 60.0% of Real Estate stocks in the S&P 500 are below their pre-COVID highs, but only 18.5% and 23.8% of Materials and Energy stocks are below this level, respectively. Additionally, 8.2% of S&P 500 members were within 5% of their pre-COVID highs, and 15.1% are within 10%.

Weakness in Consumer Staples

S&P 500 Stocks Below Pre-COVID Highs

Four S&P 500 stocks crossed below this critical level for the first time in a while yesterday: Cognizant Technology (CTSH), MGM Resorts (MGM), Tyler Tech (TYL) and Verisk Analytics (VRSK). This comes amidst weakness in the Technology sector (XLK) versus the broader S&P 500, as the sector is down close to 25% on a YTD basis versus the S&P 500’s drawdown of about 18%. However, XLK is still up close to 30% relative to pre-COVID highs.

Stocks breaking critical levels

Additionally, there are three stocks that entered a 2% channel above their pre-COVID highs for the first time in a while. Dexcom (DXCM) entered the channel amidst weakness in the broader energy space, and Pentair (PNR) extended the downtrend that is yet to break. Walmart (WMT) sold off significantly in two consecutive days after a weak earnings report and is now less than 1% from its pre-COVID high. A month ago WMT was 30% above this level.  Click here to become a Bespoke premium member today!

Stocks near pre-COVID highs

Stocks Near Pre-COVID Highs – 5/13/22

Two days ago, we outlined the percentage of stocks in each S&P 500 sector that were below their pre-COVID highs to show that many of the stocks that surged due to pandemic effects have significantly fallen off, netting long-term holders a negative return since the onslaught of the pandemic. Over the course of the next few weeks, we will be outlining the S&P 500 stocks that are breaking below/above their pre-COVID highs, as we did yesterday. Yesterday, the S&P 500 fell by 10 basis points to close at a new 52-week low, but the index is still up over 15% relative to pre-COVID highs. As of yesterday’s close, 40.4% of S&P 500 stocks were below this critical level, an 80 basis point improvement relative to the close on 5/11. 71.4% of utilities and 66.7% of communication services stocks were below their respective pre-COVID highs as of yesterday’s close. On the other hand, only 18.5% and 23.8% of S&P 500 stocks in the materials and energy sectors were below their respective highs between the start of 2019 and the end of February 2020. Additionally, 7.8% of S&P 500 stocks were between 0-5% above their pre-COVID highs (39 members).

Stocks below pre-COVID highs

Only one stock crossed below its pre-COVID highs for the first time since breaking above that level: MGM Resorts (MGM). However, the stock gapped higher by over 3% today, thus returning above this level. The weak performance as of late is due to a variety of factors including China’s zero-Covid policy, the broader market drawdown, and a weak reaction to the latest earnings report, even though the company beat on the top and bottom line.

MGM chart

One stock traded lower to enter a +2% channel relative to pre-COVID highs for the first time in a couple of months: Jack Henry (JKHY). JKHY is a payment processing and lending firm and competes with the likes of Block (SQ) and Toast (TOST). To gain access to our chart scanner tool, click here to become a Bespoke premium member today!

JKHY Chart