While the market, as measured by index products, was clearly bearish, some individual equities had counter trend moves. A general rule of thumb is that 80% of stocks move with the index, but depending on your sample set…this could vary. We chose to look at various major online retailers. The obvious include AMZN, EBAY, and AAPL. The subtle plays like SPLS and WMT are not as well known. SPLS, for example, had over 10 billion dollars in online sales in 2011, growth of nearly 4% in that area, and is raked second overall in total online sales…AMZN naturally being first.
Away from the fundamentals for a moment, for the statistics were interesting too. The average return is self-explanatory, but the R-squared is a statistical tool used to measure the degree of correlation between two items. Correlation analysis allows investors to make predictions about an asset by looking at how it reacts with other market variables. Specifically, the R^2 number, is used as a metric to measure how well outcomes can be predicted. Zero being weak and 1 being extremely strong. This can be valuable if one was doing a pair trade. The data suggests one should sell SPLS and buy AMZN for the best average result, however the R-squared was strong for both of these stocks.
AAPL again outperformed the SPX and NDX; this was similarly observed during the Black Friday exercise…link below.
http://www.keeneonthemarket.com/blog/1630-black-friday-myths-returns-spx-ndx-aapl-nke-sks-and-tgt-11-21-2012
Either way the data is interesting and something one should keep in mind.
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