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As The S&P500 Hits Daily Records, The Average Stock Is Down 6.5% From Highs

Tyler Durden's picture


"Stock-Picker's Market" is the term we hear again and again, but, as Cliff Asness blasted "I think they mean, "We will have to pick stocks now because the market isn’t making us money the easy way." As the following chart shows, the picture for most people's portfolios is a very different one from the index all-time highs that are tritted out day after day as indicative of the wealth that the Fed has created. As Asness concluded, perhaps talking-heads should more honestly explain, “Our market-timing forecasts are mostly useless most of the time, but right now, they are completely useless,” as the average member of the S&P 500 is 6.5% off its highs (as the index pushes ahead).


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Fri, 04/04/2014 - 13:44 | 4625504 Say What Again
Say What Again's picture

I've been puzzled by this for many weeks now.  I understand how they compute the index.  Does this mean that MANY more of the smaller cap names are advancing enough to move the INDEX to new highs?

Its also interesting to note how the SP500 is diverging from RUT an INDU

Fri, 04/04/2014 - 13:52 | 4625516 Dr. Engali
Dr. Engali's picture

It means they are supporting the index using e-minis while there is a sector rotation and momo sell off hidden from John Q. Public.

Fri, 04/04/2014 - 13:53 | 4625533 Say What Again
Say What Again's picture

Wait a minute.  The ONLY way to make the SP500 INDEX go up is for enough stocks in the index to go,  There has to be moar stocks (on a cap adjusted basis) going UP than there are going DOWN.  If large cap stocks in the index are going DOWN, then there needs to be many moar of the other stocks going UP.

Buying the ES doesn't change this fact, because EVERYONE is constantly arb'ing the ES against stocks in the index, and to a lesser degree options and stuff, which still lead to the stocks.

Fri, 04/04/2014 - 14:08 | 4625574 NotApplicable
NotApplicable's picture

I'm guessing the wild-card in this chart is the term, "off the highs." Stocks can still be rising, yet be nowhere near their BS highs of yesterday.

Fri, 04/04/2014 - 14:17 | 4625624 kliguy38
kliguy38's picture

let's face it......if they can hide what they were doin' to Jesser Livermore with cotton then they can sure as hell hide this market from YOU...........so just relax and watch how they pop this bubble on the suckers

Fri, 04/04/2014 - 14:10 | 4625584 Unknown Poster
Unknown Poster's picture

But all inall are the large caps going down? The mo-mo and high beta are being dumped. The big mutual fund players that have to be invested are rotating into low beta. Google is hammered but MMM not so much. JNJ new highs.

Fri, 04/04/2014 - 14:12 | 4625607 RSDallas
RSDallas's picture

I agree.  Just look at the Russell 2000.  They are dumping the high risk.

Fri, 04/04/2014 - 14:33 | 4625675 Say What Again
Say What Again's picture

I just pulled up a screen I have of the 50 largest-cap names in SP500.  Most of the TOP -Cap name are getting hammered - AAPL,MSFT, YHOO, WNR, AMED, NFLX, ETC.

Something is funny with the prints from GOOG.  I don't have enough inf to comment on this yet. For what its worth, I have developed a charting indicator that tracks the daily highs and lows based on float.  GOOG seems to trade the entire float in a matter of 2 weeks or less.

Fri, 04/04/2014 - 14:44 | 4625761 Unknown Poster
Unknown Poster's picture

Sure MSFT is bad today. AAPL is mo-mo and big. But #2 XOM, #4 IBM, GE,CVX, WMT and T aint so bad.

Fri, 04/04/2014 - 14:25 | 4625650 Dr. Engali
Dr. Engali's picture

You are assuming that all large stocks are going down. The underlying sector rotation is hidden by the fact that the indexes are being supported, and as long as the volume doesn't get out of control the indexes can be supported by using e-minis. If the sell off becomes chaotic then e-minis can't stop the bleeding.

Fri, 04/04/2014 - 14:47 | 4625781 CouldBeWorse
CouldBeWorse's picture

The S&P is no longer an index based on true market capitalization.  It changed in 2005.   Its based on shares available to the public which is a subset of its true market capitalization.   In other words shares privately placed are  NOT calcuated in the capitalization figure used by the index  (but they would be counted when it comes time to disperse dividends amongst share holders.)     Price movement of companies with the most shares outstanding to the public influences the index more than aggregate market capitalization.   Again,  the index uses a subset of capitalization.  The devil lives in the details.

Fri, 04/04/2014 - 13:53 | 4625534 flacon
flacon's picture

S&P = Chuck Schumer Fund. It always goes up. 

Fri, 04/04/2014 - 15:10 | 4625911 ReactionToClose...
ReactionToClosedMinds's picture

ahhhh...the venerable Senator Schumer...........the brightest guy in the US Senate (in his own mind) .........

Can you imagine Ben Franklin taking in this bombast?   "A republic if you can keep it ......" 

Fri, 04/04/2014 - 13:59 | 4625553 LawsofPhysics
LawsofPhysics's picture

What?  No moar "float-shrink?  bullshit, there's still plenty of "free money" flowing into the system.

Fri, 04/04/2014 - 15:28 | 4626012 Save_America1st
Save_America1st's picture

the E-Trade baby is really having a hard time dealing with the markets these days too.


Fri, 04/04/2014 - 16:23 | 4626308 mac768
mac768's picture

Just wait until the leveraged momos realize the facts

Fri, 04/04/2014 - 13:44 | 4625510 Squid Viscous
Squid Viscous's picture

same here, been getting ass raped in SPY puts... how the fuck is this still at 1875...

Fri, 04/04/2014 - 13:47 | 4625522 fonzannoon
fonzannoon's picture

Guys...why is this so hard to understand? I am being dead serious here. No sarc bs. This chart is the one the Bernakyellen has been dying to be able to flaunt. Remember, they are combatting the great deleveraging with the wealth effect. The problem is, even inside a bull market the average dunce still finds a way to lose their ass. So the fed, in it's own way, is broadcasting to anyone and everyone, pensions, 401(k) providers etc etc etc...GET IN THE FUCKIN INDEX ALREADY AND WE WILL DO THE HEAVY LIFING".

It's that simple.



Fri, 04/04/2014 - 13:51 | 4625529 Dr. Engali
Dr. Engali's picture

I do not understand why people don't get this fact. The market is a damn policy tool, it will not be permitted to go down in a way that the public can visibly see. 

Fri, 04/04/2014 - 13:55 | 4625541 Say What Again
Say What Again's picture

You are confusing rhetoric from the Fed, the president, CNBC, etc., with arithmetic calculations that are used to derive the value of the index.

Fri, 04/04/2014 - 13:57 | 4625545 fonzannoon
fonzannoon's picture

Confusing the rhetoric or linking it directly? 

Fri, 04/04/2014 - 14:00 | 4625557 LawsofPhysics
LawsofPhysics's picture

Please, the "value of the index" will be exactly what they want it to be.

There hasn't a mechanism for true price discovery for a long long time...

Fri, 04/04/2014 - 14:41 | 4625704 Say What Again
Say What Again's picture

Say what you will, but the price of the index is STILL a COMPUTED value, based on the price of 500 stocks.

"They" can not make the index move UP or DOWN without buying or selling the stocks in the index.

p.s. Who is "They"?

Fri, 04/04/2014 - 17:39 | 4626532 LawsofPhysics
LawsofPhysics's picture

The Federal reserve can "create" as much purchasing power as the want (or remove as much as they want.  That is fact.  They can "buy" " and then "sell" as much as they want, hence making just about anything on the index go up or down...

Fri, 04/04/2014 - 21:30 | 4627112 Say What Again
Say What Again's picture

We all know that the Fed has been buying various treasuries and bonds.  But you are telling me that you believe the Fed is buying enough STOCK to push the indexes?

Maybe the Fed has a few HFT installations of their own.

Fri, 04/04/2014 - 14:07 | 4625568 Dr. Engali
Dr. Engali's picture

Value of the index? You have been here this long and still you have learned nothing? I'll repeat what I said earlier.... Value means nothing when the cost of "money" is zero to the counterfeiters. That is how we get AMZN and the likes trading with a 3000 multiple.

Fri, 04/04/2014 - 14:39 | 4625725 Say What Again
Say What Again's picture

You are missing my point.  I understand that the buying power of our fiat currency is decaying.  I understand how "they" can hide inflation though printing money, and playing games with the CPI, such as claiming "hedonic" improvements in things like computers, phones, and cars, and shit.

BUT. The price of the index is a function of the price of the 500 underlying stocks.

Fri, 04/04/2014 - 16:02 | 4626206 GooseShtepping Moron
GooseShtepping Moron's picture

I get what you're saying, Jules. I was wondering the same thing myself. How can so many stocks in the index be that far down without the index itself reflecting it in any obvious way?

I'm sorry to say that at this point I do not have an answer. I will think about it.

I'm guessing (and this is just a shot in the dark) that it might have something to do with mutiply-indexed stocks getting pumped overseas by foreign currency depreciation.

Fri, 04/04/2014 - 17:19 | 4626480 Nick Jihad
Nick Jihad's picture

The chart at the top of the article?  It compares the price _today_, with the highest price in the last 52 weeks. Random wobble alone means most stocks are off their 52-week peak at any given time.

Fri, 04/04/2014 - 13:48 | 4625523 asteroids
asteroids's picture

Notice how they SLOWLY bring the markets up and down. If you are short or playing volatiliy,  decay kicks in for you, free money for them. I bet they take their profits and bet against you. Until we see some real panic, assume there will be a bounce shortly.

Fri, 04/04/2014 - 14:37 | 4625715 Herd Redirectio...
Herd Redirection Committee's picture

Oh yeah, any sort of 'investing' involving options or leveraged ETFs and precious metals would long ago have left one bankrupt, destitute,  and abandoned by all family and friends.

Fri, 04/04/2014 - 13:46 | 4625512 ebworthen
ebworthen's picture

"...is a very different one from the index all-time highs that are tritted out day after day..."

I think you meant "trotted" out, but I like it; kind of a cross between pigs feet and tits; maybe this pig will be tits and feet up at some point ;-)

Fri, 04/04/2014 - 13:46 | 4625515 disabledvet
disabledvet's picture

again..."already putting in the bottom."

1200 on the S&P sounds like a good first stop to me.

Fri, 04/04/2014 - 13:51 | 4625528 ebworthen
ebworthen's picture

S&P 666 is true valuation, March 2009 and mid-September of 1996, no value added since then.

Fri, 04/04/2014 - 13:59 | 4625551 Cursive
Cursive's picture


emphasis on "first stop"

Fri, 04/04/2014 - 13:51 | 4625530 SDRII
SDRII's picture

it is the |"smart beta|" |ETF dont you know...

Fri, 04/04/2014 - 13:53 | 4625535 mayhem_korner
mayhem_korner's picture



Chart looks like a sandwich after a single Chris Christie bite, IMHO.

Fri, 04/04/2014 - 13:55 | 4625540 Bill of Rights
Bill of Rights's picture

Margin party of 5 your table is ready!  Margin party of 5 your table is ready.

Fri, 04/04/2014 - 13:57 | 4625547 LawsofPhysics
LawsofPhysics's picture

Wow, that curve looks exactly like the curve for Energy Returned on Energy Invested...

The greatest shortcoming of the human race is our inability

 to understand the exponential function.

  - Dr. Albert Bartlett

    Professor Emeritus, UC Boulder



Fri, 04/04/2014 - 14:00 | 4625550 foodstampbarry
foodstampbarry's picture

Bite Bite sip sip... it's the deep dish cambo mambo!

sry, can't that tune outta my head.

Fri, 04/04/2014 - 14:09 | 4625577 ebworthen
ebworthen's picture

Mambo #5?  I knew our society had turned down a cul-de-sac when Lou Bega was on a float in the Macy's Thanksgiving Day parade in 1999 singing it.

"A little bit of Sandra in the sun, a little bit of Mary all night long..." with little Kids and Mom's & Dad's along the parade route dancing about.


Fri, 04/04/2014 - 14:02 | 4625560 Bill of Rights
Bill of Rights's picture

Note the Miners are nice and green, I love going long cheap mining stocks :) Glad I have plenty of cash on hand as well as the physical...

Fri, 04/04/2014 - 14:39 | 4625727 Herd Redirectio...
Herd Redirection Committee's picture

Hmm, let me see, some Mexican silver miner trading at book value, or Chipotle Mexican Grill/Twitter/Facebook....

Fri, 04/04/2014 - 14:04 | 4625565 venturen
venturen's picture

The losses will be made up in volumn!

Fri, 04/04/2014 - 14:15 | 4625616 q99x2
q99x2's picture

This means they should buy Bitcoin.

Fri, 04/04/2014 - 14:36 | 4625710 CouldBeWorse
CouldBeWorse's picture

The S&P Index is a float-weighted index meaning member stocks in the 500 with more shares outstanding have a greater influence on the index value than companies with a smaller shares outstanding.  So mathimatically looking at the quantity down doesn't mean as much as who is down...or up as this implies.  It does make you go hmmm, however. The ZIRP share buy-back fever of the last few years has definately decreased the float quantity.  So by definition since the float quantity changes so must the index.  For the index to hold steady,  prices would need to rise to offset the lower float.  For the index to rise with a falling float, prices of individual stocks would really need to rise, but this is not supported by the chart.  Most are not rising.  WTF?

This only leaves the "propriatry divisor" that so greatly influence the final index value.   Mere mortals are not allowed to know how its calculated.   They can put the index any place they want by changing the divisor.   My thinking is the divisor is changing because we know the float is decreasing and if the majority of companies are off their highs (implication of the chart),  the only way to move the index higher is to fudge the denominator. 

Things that make me go hmmmm.

Fri, 04/04/2014 - 15:24 | 4625983 The worst trader
The worst trader's picture

Is it time to BTFD?

Fri, 04/04/2014 - 15:58 | 4626175 chistletoe
chistletoe's picture

This past winter there has been a paradigm change.


Maybe in another couple of years the analysts will begin to document it..... the winter saw the top of the fluff, facebook, twitter, apple, et al while it saw the bottom of the energy market ... the powers that be and the media are still very hard at work telling everybody that "America is on the road to energy independence" and "The USA is awash in oil" and  that is just as much of a lie as everything else they talk about ... the truth is that we are staring a new crisis in the face ... because as a result of a combination of factors including the global warming advocacy and the war against coal, including the ultra low prices for years for natural gas, and including the war against fracking and the war against pipeline construction ... current inventories of natural gas, even if we really have 833 bcf as reported by the EIA, are less than a 10 day supply of what the country uses, and new exploration and drilling is at a 6 year LOW, making real shortages and including massive electricity blackouts, to be maybe months away if we are lucky .....


so while the frou frou stocks may be crashing, all the energy stocks are holding their own or rising, just like in the seventies, just like the early years of the Bush administration, except a lot worse this time, A lot worse ....

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