Many market historians will tell you that 20% corrections happen about every three years. We’re due, no question and this could certainly be it. I have no idea.
Anyway, just off the top of my head I pulled up some well-known names after the close today to see if garden variety would be the right term this time around. I’m not so sure and if nothing else, as you’ll see, you have to wonder how much further some of these will fall based upon some LARGE pullbacks, some , technically, in a bear market.
To be clear, I rounded these numbers to the nearest full percent and used today’s closing price. The loss represents the move from the 52-wk high. I’ll let you look at the list and add some of my novice commentary after. Hopefully, this will get you to think about where we are.
Ford (F) -24%
General Motors (GM) -28%
Boeing (BA) -16%
Deere (DE) -17%
Zillow (Z) -36%
LinkedIn (LNKD) -23%
American Airlines (AAL) -31%
United Airlines (UAL) -17%
Whole Foods Market (WFM) -44%
Anadarko Petroleum (APC) -22%
Exxon Mobil (XOM) -13%
Chesapeake Energy (CHK) -37%
Macy’s (M) -10%
Amazon (AMZN) -24%
Viacom (VIA) -21%
This is by no means an all encompassing list. I’m sure you have many names you follow that would slide into this group. I tried to just snag a cross section of many sectors. You know the sectors that have held up well as well as the stocks that have as well. Some of those were even hit today, Microsoft (MSFT) comes to mind.
Financials are holding up fairly well. One could argue that the domestic recovery must be at least stable if financials are not selling off aggressively. Even Citibank (C) which one could argue is an emerging market bank is not that far off from its highs.
Some of the above names have been quite loved at different points in the year. The airlines come to mine, General Motors, remember when all the bad headlines were baked in?
The big question is, have we been correcting and these stocks as well as ones like them are ready to lead us back to new highs? Or were these name telling us all along that a large pullback was coming and while these may not have too much further to go, the market overall, does.
There’s really no way to know without more clarity, specifically on Europe. Is it possible that Ford sandbagged some guidance on analyst day to give their new CEO Mark Fields a clean slate? Alcoa CEO Klaus Kleinfeld said this week that while Europe is weakening, “It’s not as bad as some have made it out to be.” Maybe that was a reference to one of his biggest customers?
Regardless, we won’t know for sure if we’ve reached a bottom for days, possibly weeks after it has occurred. My suggestion is focus on some names that have already sold off tremendously. Some of the above names are pretty attractive right here.