Following the Fed announcement, where Bernanke et. al. maintained the $85 billion a month in bond buying but suggested an end to stimulus in 2014 or earlier, ahead of expectations, the market sold off significantly. Additionally and probably more importantly, Bernanke stated they have moved the goalposts to a 7% unemployment rate as the threshold to when they end or taper QE actions. On this news, the S&P 500 lost about 140 basis points in value in yesterday's trading on losses across all sectors. That said, the weakness appeared focuses on the less cyclical sectors.
The price/volume heat map reflects the price dynamics. The red areas of the map- those stocks showing the highest degree of higher volume price declines on higher supply and/or price increases with little volume support- were concentrated in the non-cyclicals. Below the heat map, I show the same data in a different format. This second chart shows the percentage of stocks in sector groups experiencing either strong upswings (++) or large sell offs (--) with volume support. Additionally, the chart shows more benign price/volume gainers (+) and losers (-) along with stocks exhibiting mixed signals (0). One can see the large percentage of names in the '--' category across all sectors, meaning the sell off in those names came with increasing supply. I do find it interesting that both the heat map and the percentage break down charts show signs of relative strength in the materials, technology, and discretionary sectors.
The price/volume heat map reflects the price dynamics. The red areas of the map- those stocks showing the highest degree of higher volume price declines on higher supply and/or price increases with little volume support- were concentrated in the non-cyclicals. Below the heat map, I show the same data in a different format. This second chart shows the percentage of stocks in sector groups experiencing either strong upswings (++) or large sell offs (--) with volume support. Additionally, the chart shows more benign price/volume gainers (+) and losers (-) along with stocks exhibiting mixed signals (0). One can see the large percentage of names in the '--' category across all sectors, meaning the sell off in those names came with increasing supply. I do find it interesting that both the heat map and the percentage break down charts show signs of relative strength in the materials, technology, and discretionary sectors.
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