In the wake of the FOMC meeting and the IPO hype, we face a week with little new information - the lull before earnings season. This sort of vacuum makes it difficult to predict the week ahead, but I have an interesting idea:
This week will feature discussion about market divergences - gold, oil, small caps, and bitcoin are losers. Large cap stocks have been winners. Why?
A lot of buzz came from a Bloomberg article saying that 47% of NASDAQ stocks were "mired in a bear market." This was portrayed as showing a narrowing appetite for risk and loosely links it to prospective changes in Fed policy. It is an intriguing topic for further study.
Prior Theme Recap
In my last WTWA I predicted that the media focus would be the FOMC and the potential for changing course. That was very accurate, since the Fed meeting was the center
My few forays beyond individual issues have been primarily limited to indexes with fairly limited holdings. My previous analysis of individual DJIA (NYSEARCA:DIA) components, for example, found that the market was slimly undervalued to fully valued, with little margin of safety. An analysis of the Dividend Aristocrats index (NYSEARCA:NOBL) found that those issues tended to trade, on average, at a modest premium to their fair values. These analyses were fundamentals-based, looking at not only historical trading multiples but also individually built discounted cash flow models for each firm in question.
While pursuing a similar undertaking for the S&P 500 (NYSEARCA:SPY) would probably be beyond my means (and patience, and lifetime besides), I remained curious-- as many others are as well, no doubt-- as to whether or not the same findings would apply to a broader index like the SPY. Obviously, constructing individual discounted cash flow models would be impossible. And