The Average World Stock Is Already In A CorrectionOctober 02, 2014
While many commenters noted how the Russel 2000 has now entered into a correction after another weak close yesterday, we thought it is noteworthy to highlight that this weakness isn’t just in small-caps like most commenters are implying but it is in large-caps as well.
A correction can be loosely defined as a 10% drop from a recent high. Using this definition, the average stock in the MSCI World Index has now entered into a correction. In the first chart below, we show how far off the average stock in the MSCI World Index is from its 50-day day high. The current reading is 10%.
The average stock in the MSCI North America hasn’t quite entered correction territory when looking at its distance from the 50-day high (it is off 8%). However, the average stock in North America is in a correction if we look at how far off it is from its 100-day high.
Corrections can also be found in Europe and Asia as well.The average stock in Europe is 11% off its 50-day high and the average stock in Asia is 10% of its 50-day high.
Finally, if we lengthen our view and see how far off the average stock in Europe is from its 252-day (1-year) high than we are almost in bear market territory for the first time since 2012. The average stock in Europe is 18% off its 252-day high.