The Dow Jones Industrial Average is currently riding a six-week losing streak for the first time in more than five years. In last week’s Bespoke Report newsletter (read it here), we noted the chart below which shows the longest weekly losing streaks for the Dow since 1900. As you can see, it’s very rare that we get to seven, with only seven prior occurrences. And there has only been one eight-week losing streak for the Dow since 1900! Start a two-week free trial to Bespoke Institutional to access all of our research and interactive tools.
As you can imagine, a six-week losing streak for the stock market does a number on internal indicators, some of which are highlighted below. This is a snippet from our Morning Lineup sent to clients each morning, so if you’re interested in staying up-to-date on these readings, you can find them in this report.
As shown in the top left chart, the S&P 500 has moved into extreme oversold territory relative to its 50-day moving average. The second chart on the left shows the percentage of stocks in the S&P that are overbought vs. oversold. While not at the extremes we saw at the end of 2018, the percentage of oversold stocks is definitely elevated right now at 52.8%.
The bottom left chart shows the relative performance of stocks versus bonds over the last year. The recent rally for Treasuries coupled with the decline for stocks has left stocks underperforming bonds over the last 12 months.
On the right-hand side of the snapshot, we first provide a number of additional market metrics, with the arrow signifying the one-week change of each reading. The second section on the right shows sector trading range levels, and here you can see that every sector except Utilities is currently oversold. Finally, the third table on the right shows that commodities are extremely oversold while Treasuries are now extremely overbought.