Stock Market Roller-Coaster Ride Continues
Stock-Markets / Stock Markets 2012 Oct 28, 2012 - 06:31 AM GMTBy: PhilStockWorld
Courtesy of Doug Short: The major world indexes on my watchlist have been oscillating wildly between weekly losses and gains. Last weekend’s snapshot showed all eight posting gains with an average of the bunch at 2.02%. But the week just closed saw the average plummet to -1.38%. China took both the top and bottom spots. The Hang Seng was the top (i.e., least bad) performer with a nearly flat finish of -0.03%. The Shanghai Composite finished at -2.92%. The S&P 500 and FTSE 100 hovered in the middle of the pack, two basis points either side of the -1.50% mark.
The four-week table below documents the pattern of oscillation I mentioned at the outset. Had I room for a five-week table, you’d see that the week ending September 28th averaged -1.31%, so it was also part of the ongoing roller-coaster ride.
This week two indexes on the watch list are in bear territory — the traditional designation for a 20% decline from an interim high — unchanged from last week. See the table inset (lower right) in the chart below. At the bottom of the Bear Zone is, of course, the Shanghai Composite, this week even deeper in the red at -40.48% from its interim high of August 2009. The other bear-zone index is Japan’s Nikkei, which has around half the loss at -20.28% from its interim high of April 2010. At the other end of the inset, the S&P 500 is now 3.67% off its interim high, set the day after QE3 was announced.
As for year-to-date performance, here is a table showing the 2012 peak percentage gains, sorted in that order, and current YTD gains for the eight indexes. The Hang Seng and SENSEX are closest to their 2012 peak. In contrast, the Shanghai continues to hold dubious distinction of being the only index with a YTD loss.
A Closer Look at the Last Four Weeks
The tables below provide a concise overview of performance comparisons over the past four weeks for these eight major indexes. I’ve also included the average for each week so that we can evaluate the performance of a specific index relative to the overall mean and better understand weekly volatility. The colors for each index name help us visualize the comparative performance over time.
The chart below illustrates the comparative performance of World Markets since March 9, 2009. The start date is arbitrary: The S&P 500, CAC 40 and BSE SENSEX hit their lows on March 9th, the Nikkei 225 on March 10th, the DAX on March 6th, the FTSE on March 3rd, the Shanghai Composite on November 4, 2008, and the Hang Seng even earlier on October 27, 2008. However, by aligning on the same day and measuring the percent change, we get a better sense of the relative performance than if we align the lows.
A Longer Look Back
Here is the same chart starting from the turn of 21st century. The relative over-performance of the emerging markets (Shanghai, Mumbai SENSEX, Hang Seng) is readily apparent, especially the SENSEX, but the trend over the past two years has not been their friend (make that three years for the Shanghai).
- Phil
Philip R. Davis is a founder of Phil's Stock World (www.philstockworld.com), a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders. Mr. Davis is a serial entrepreneur, having founded software company Accu-Title, a real estate title insurance software solution, and is also the President of the Delphi Consulting Corp., an M&A consulting firm that helps large and small companies obtain funding and close deals. He was also the founder of Accu-Search, a property data corporation that was sold to DataTrace in 2004 and Personality Plus, a precursor to eHarmony.com. Phil was a former editor of a UMass/Amherst humor magazine and it shows in his writing -- which is filled with colorful commentary along with very specific ideas on stock option purchases (Phil rarely holds actual stocks). Visit: Phil's Stock World (www.philstockworld.com)
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