The Market Finds Separation

This summer's rally in the stock market was accompanied by an unusual phenomenon: Stocks became highly correlated to one another. When one stock or sector moved up or down, it was likely that they were all moving up or down.

But that seems to be dissipating now. The correlation among the S&P 500's ten sectors was at 89 percent in July, but that figure dropped to 85.7 percent in August, according to the ConergEx Group, a market-analytics firm. Now it's dropped even further, down to 83.7 percent.

This is generally considered a good sign for the market. It's healthier for investors when company fundamentals drive a stock's price as opposed to macroeconomic trends. It also provides an opportunity for  actively managed funds - such as the kind we use here at Echelon Wealth Strategies - could really add a lot of value to individual portfolios.