A New High, Sure. But Not for Most Stocks.
If you want to beat the market, you have to own the stocks that beat the market. But these days, the winners are so few, that 70% of stocks do not outperform.
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Rich Bernstein of Richard Bernstein Advisors posted a chart on Wednesday that really caught my eye. It’s the Percentage of Stocks that Outperformed the S&P, from 1990 to present. His chart shows the median is 49%. On it he has circled 2023 and 2024 year to date as well as 1998-1999. All four of those years that number was in the 25-30% area.
I thought of that because on the day that the S&P made a new high and Nvidia NVDA took over the world, Cisco CSCO, the fan favorite from the late 90s was on the new low list. For those of you who don’t remember when Cisco was all the rage, take a look at the chart from the late 90s until halfway through 2001.
The world and markets are different now than they were then (for many reasons) but Cisco more than tripled in 1999 until the high in 2000. Look at that run it had in the final fling. From January through early March 2000 it was up over 50%. And now it is on the new low list the day the S&P made an all time high.
You know what else we saw on the day the S&P made a new all time high? The number of stocks making new highs on the NYSE chimed in at 99. We had nearly 300 a few short weeks ago.
Ahh, but all the action is on Nasdaq so we should look there, right? Nasdaq, for most of the day had more new lows than highs but in the end it pulled it out with ten more highs than lows. New highs numbered 133. Nasdaq had nearly 300 a few short weeks ago.
On the day that the S&P and Nasdaq made a new high breadth couldn’t even get positive enough to turn the McClellan Summation to the upside. It will require yet another day of good breadth for that.
On the day the S&P tacked on 62 points upside volume was 66% of the total volume. Last week’s 42 point rise had over 70%. On the day Nasdaq tacked on 330 points its upside volume accounted for 70% of the volume.
Wait, there’s more. The bonds rallied again, coming down just under 4.30% on the Ten Year. And Utes lost one percent. Hey, I thought Utes were an AI play. I thought Utes were a rate play. Wednesday they were neither. Wednesday they were a source of funds so folks could plough more money into Nvidia.
On this historic day the DJIA and the Transports are below their recent highs. But hey, all that chatter about the weak economy went away because the stock market was up. That is the market we have.
