The S&P 500 fell more than 2% on Friday, and no areas of the market were spared. We broke the S&P 500 into deciles (10 groups of 50 stocks each) based on how stocks performed from the 6/27 post-Brexit low through last Thursday’s close because we initially thought that stocks that did best during that rally might be down the most on Friday. That wasn’t the case, though. When we calculated the average Friday performance of the stocks in each decile, we found that declines were evenly distributed regardless of performance during the post-Brexit rally.
Decile one on the left side of the chart below contains the 50 stocks in the S&P 500 that rallied the most from 6/27 through 9/8. Decile two contains the 50 next best performers, and so on and so forth until you get to decile ten, which contains the 50 stocks in the S&P that did the worst during the 6/27-9/8 rally. The numbers shown represent the average performance on Friday of the 50 stocks in each decile.
Normally during big sell-offs after rallies, you’ll see the stocks that have recently been the biggest winners get hit the hardest. The stocks that went up the least during the rally will typically hold up better during the decline. That wasn’t the case at all on Friday, though. As you can see, every decile’s average stock was down between 2.5% and 3%, and it was actually decile 10 (50 worst stocks during the 6/27-9/8 rally) that saw the biggest average decline (tied with decile five).
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