You have probably been hearing a lot about China devaluing the Yuan and worries about the Fed raising interest rates in September as the cause of the recent market sell off.
In recent discussions with clients I have been referencing the chart above. The chart shows that although the S&P 500 was recently only 3% below its high, there were 252 companies within that index that were greater than 10% below their own recent highs. That number has only increased in August.
My feeling is that the recent volatility in the market is a reflection of this. The large names that were holding the index at higher levels (Apple to name one) have been losing value and the index may be on its way to more appropriately representing the value of the stocks that comprise it.
Please keep in mind that even with today’s sell off the market is only off 3.5% from its highs and this should not be a reason to panic.