Distance Below 52-Week Highs By Market Cap and Sector

Hickey and Walters (Bespoke) submit: With the markets closing at record highs once again on Friday, we calculated the average distance that stocks making up large, mid and small cap indices are currently trading from their 52-week highs. In the large cap S&P 500, the average stock is now 7.9% below its 52-week high. In the mid cap S&P 400 index, the average stock is 9.3% below, and in the small cap S&P 600 index, the average stock is trading more than 13% below its 52-week high.

Based on this example, the long awaited shift in leadership from small and mid caps to large caps appears to be occurring.

Breaking out the average distance from 52-week highs by sectors shows that Consumer Discretionary (-13.71%) and Financial (-13.69%) stocks have been the biggest laggards in the market, while Energy (-5.48%) and Telecom Services (-6.17%) stocks are trading closest to their 52-week highs.

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Finally, we also filtered the average distance each stock is trading from its 52-week high grouped by sector and then market cap. Here we found that in each of the ten S&P sectors, the small cap group of the sector is trading the furthest from its highs, while the large cap group is closest to its highs for nine of the ten sectors. (In the Materials sector, the mid cap group of stocks are trading closest to their 52-week highs.)

Comments

[Wayne Ford]

So why shouldn't I interpret this analysis as a signal to buy small caps, because they have more ground to cover? That is, it appears to be 'too late' in this cycle to buy the large cap leaders.