Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

How is the Market Treating You?


Mirror mirror on the wall. What is the great divergence of them all??


OK. I woke up early and got to thinking. What am I doing waking up early after swapping a gazillion bonds yesterday? No clue. But let me get on with my divergence.

The party hats are now distributed and I could sense the elation as my ritual of hitting practice balls and stopping in our locker room for a cold one last nite. And I mean, people are elated about this new high in the Dow we will certainly get today or somewhere soon. So I asked the now rhetorical question to a few--'how is the market treating YOU?' Without an obnoxious tone, just one of curiosity, mind you. People didn't exactly crow about their portfolios setting records...And no, that didn't surprise me. No acrimony here, just honesty.

So I got to thinking (dangerous, no?). How many stocks in the Dow will make new highs along with the average making new highs? Can you guess? Well I did (I won't tell my answer because while pessimistic it wasn't pessimistic enough!). You must admit that the divergence is not only negative and could suggest that the index is improperly calculated, but also that it makes the case of why consumer confindence is so low. Consumer confidence is usually a coincident indicator with stock prices and for the most smart people own STOCKS not INDICES. So this data is rather important and suggests to me that many portfolio managers are underperforming and will continue to so do. Incidentally, this usually occurs before bear markets in my experience.

Below are the results and charts of my little study.

Dow Chart

There are four that I would consider 'close' to records - Altria (MO), American Express (AXP), Citigroup (C) and Proctor & Gamble (PG). Which leaves 26 of the 30 nowhere close to records. So if that isn't a divergence, I challenge anyone today to show me a better one. it makes one wonder about the index's composite and what it says about the economy. To me, it is a caution sign and like I said yesterday, I am a decided party pooper at this time.

Altria (MO)

American Express (AXP)

Proctor & Gamble (PG)

Citigroup (C)

No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos