This November, the S&P 500, Dow Jones Industrials and NASDAQ 100 cash indices closed down -7.48%, -5.44% and -11.17%, respectively. Year-to-date, that left the indices down -38.96%, -33.44% and -43.13% from their respective 2007 closes. Even so, those final levels mask the extent of losses experienced intramonth when the S&P 500 traded at eleven-year lows.
Sentiment for the period was characterized by an evolution from systemic concern to economic panic, featuring major automotive and home sales declines, cross-industry layoffs, profit losses and outlook reductions, and a series of dismal economic reports indicating multi-decade slowing and unemployment topping 6.5%.
Matters were only made worse by depressing Big Three Automaker testimony before Congress on a failed bid to seek $25 billion in loans, major internal changes to the workings of the planned TARP rescue efforts, and a near miss on Citigroup's survival.
Similar to October, however, the final sessions of the month saw a major reversal of epic proportions on extreme oversold technicals and a modicum of economic leadership offered by the President Elect.
Style-wise, Mid- and Large-Cap stocks outperformed Small-Caps, while Sector-wise, Consumer Staples and Energy stocks greatly outpaced all others, especially Financials in spite of their outsized month-end recovery. With many technical indicators once again suggesting short-term overbought conditions, The New Hope among traders for December, is that longer-term oversold readings, positive seasonality and continued responsiveness in the credit markets will provide equities with a holiday boost into the new year.
Volatility: Extreme/Historic (VIX 47-81)
The Style-Box was calculated using the following PowerShares™ ETFs: Small-Growth (PWT), Small-Value (PWY), Mid-Growth (PWJ), Mid-Value (PWP), Large-Growth (PWB), and Large-Value (PWV). The Sector-Ribbon was calculated using the following Select Sector SPDR™ ETFs: Materials (XLB), Industrials (XLI), Energy (XLE), Staples (XLP), Discretionary (XLY), Financials (XLF), Technology (XLK), and Healthcare (XLV). The Standard & Poors 500, Dow Jones Industrial Average and NASDAQ 100 may be traded through ETF proxies, including the SPY or IVV, DIA and QQQQ, respectively.