Stocks Have a Fever, and the Only Prescription Is More Correlation

Why buy or sell one stock when you can just trade them all?
A popular indicator among the stock market technician types are “90%” up or down sessions, days when 90% of the stocks in the S&P 500 move in the same direction.
But in this risk on/risk off world in which we all live, 90% days are happening with remarkable frequency.
Courtesy of Chris Verrone at Strategas Research Partners, we have these charts, which pretty much tell the story. The first chart shows how the number of these days has exploded since 2007.
What’s noteworthy in the second chart is the difference between the first half of 2011 and the tally for the past three-and-half  months. Since the end of June, we’ve had more 90% days than in all of 2007, and more than the entire period stretching from 2002 through 2006 combined.
The reasons at this point are well known: rolling financial crises and the explosion of exchange traded fund trading which has made whipping around baskets of stocks a breeze. At this point, there’s little on the horizon to suggest this trend will change soon.