In These Markets the Question is What Lurks Beneath


Recent action in stock market indexes has hidden what's been going on beneath the surface. 

Real Money's James Deporre looked at the phenomenon on a recent Monday which saw an “ugly” day of trading, especially so in the morning trading session:

“For months now, I've been writing about the disconnect under the surface between the indices and many of the individual stocks. There has been a bear market in many areas of the market starting in February, but we rarely hear about it in the business media. The focus on financial television is largely on the indices, which do not at all reflect what is really going on in this market.”

Deporre adds that that kind of superficial focus has real-world consequences. 

TheStreet RecommendsPRESS RELEASESChiara Ferragni Becomes A New Hublot Global Ambassador And Face Of The Global Campaign9 minutes agoPRESS RELEASESDigiMobi, Powered By GpsGate Software, Awarded Vehicle Tracking Services (VTS) Solution Contract By Hong Kong International Airport23 minutes agoPRESS RELEASESPet Supplements (and Science) With Soul32 minutes ago

“What is particularly irksome to me about this disconnect in market coverage is it helps to keep sentiment elevated and optimistic. Instead of getting a wash-out that will help small-caps and growth names hit bottom, we end up with this media-created illusion that stocks are acting in a fantastic manner.”

Deporre cites a foul mood among traders that’s moving many of them to a capitulation stance where they yield to the trend even though it doesn't really make any sense.

“[Short-term] weakness in the senior indices is helping that “give up” to progress, but we really need the indices to weaken and the media to stop with its constant bullishness if the secondary stocks are going to improve.”

Get more trading strategies and investing insights from the contributors on Real Money.

Leave a Reply

Your email address will not be published.