When markets break down, as we’ve seen recently, I get to work on the data. In particular, I want to identify potential contrarian situations. Here’s one I’m looking into, as the S&P 500 Index ($SPX) nears a 10% decline from its highs earlier this year.
I sought out stocks that, while they are among the 100 largest in the S&P 500, have shown the potential to march to the beat of their own drum. That is, they have exhibited low correlation to the other 99 stocks in the S&P 100 Index ($ONE). As a result, they may offer some relative return, regardless of future market direction.
