Stocks fell for a fifth consecutive day on Wednesday, the longest losing streak in a year. While there have been 29 five-day declines in the past 13 years, with an average loss was 5.5 percent, this most recent decline was significantly less painful for the bulls. Stocks fell just 1.9 percent.
The team at www.bespokeinvest.com confirms three other similarly shallow declines among the larger group of 29. Importantly, stocks rallied during the next five days in each of these three cases.
So with history as our guide, we would expect a 1-4 percent rebound over the next five days. The question is: What should we buy? We can certainly add a few SPX contracts to the portfolio, but we think we can get more bang for our buck by focusing on higher beta names... stocks which move more than the market. In case you've forgotten...
So we screened the S&P 1500 for stocks with betas of at least 1.6, meaning stocks which moved at least 1.6 percent compared to 1 percent moves for the market. In order to capture both short and longer term trends, we included both one-month and YTD beta calculations. Here are the ten stocks which made the cut:
For the benefit of blog readers, we include some other movers which narrowly missed our cut-off. All of these have 1-month and YTD betas of at least 1.5:
Atmel (ATML), Blackrock (BLK), Brown Shoe Co (BWS), Cirrus Logic Inc (CRUS), Fortune Brands( FBHS), Geospace Technologies (GEOS), Masco Corp (MAS), Mohawk Industries (MHK), Oshkosh Corp (OSK), Waddell & Reed (WDR).