Analysis: Most US stocks are showing a trend of falling without rising, and the market is experiencing extreme divergence
BlockBeats News, November 6th, KobeissiLetter released a market analysis stating that we are witnessing extreme divergence in the U.S. stock market. The average stock correlation of the S&P 500 Index over 3 months has dropped to 0.13, close to its lowest level since 2018. This indicator is used to measure the relative movement of each constituent stock of the S&P 500 Index to the index. This means that the movements of most stocks are independent rather than following the broader market index. In contrast, during the market crash in April, the average correlation of stocks was around 0.50.
In short, the U.S. stock market has become highly fragmented, with a few large-cap tech companies driving most of the gains. Most stocks have not participated in this rally, showing a situation where they fall together but do not rise together.
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