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Even though the market essentially traded flat today, we finally saw sectors like Financials, Industrials and Consumer Discretionary pull back, while underperforming sectors like Utilities and Consumer Staples actually rallied. In terms of individual stocks, the post-election winners were finally in the red, while the post-election losers finally caught a bid. We can highlight this using our decile analysis of the S&P 500. To run the analysis, we broke the index into deciles (10 groups of 50 stocks each) based on stock performance from the close on Election Day (11/8) through last Friday’s close. We then calculated the average price change today for the stocks in each decile.
As shown below, the two deciles of stocks (top 100 stocks) that had done the best since Election Day saw average declines today of more than 1%. At the other end of the spectrum, the two deciles of stocks (bottom 100 stocks) that had done the worst since Election Day both actually averaged gains today.
Now let’s see if today’s “mean reversion” trade has any legs or if it’s just a one-day thing.