Although the U.S. equity market has had an impressive run since the July 7th lows, what many investors might find less-than-reassuring is how narrow the advance has been.

In the Nasdaq-100 index, for example, one stock, Apple, accounts for nearly one-fifth of the 11-percent gain. It has also pulled much more than its already hefty weight in the index. Otherwise, just nine stocks are responsible for more than half the move in the technology-laden bellwether.

While that doesn’t mean the rally can’t carry on, it’s another reason to be cautious on reading too much into the advance we’ve seen so far.

>

Symbol Name 7/7/2009 Close 7/22/2009 Close Net Change in Points Net Change in % % of Overall Move in NDX % Weight in NDX Cumulative % of Overall Move
NDX Nasdaq 100 Stock Indx 1404.78 1565.00 160.22 11.41%
AAPL Apple Inc 135.40 156.74 21.34 15.76% 18.35% 13.97% 18.35%
QCOM Qualcomm Inc 43.68 48.45 4.77 10.92% 6.58% 6.83% 24.93%
MSFT Microsoft Corp 22.53 24.80 2.27 10.08% 4.81% 5.36%
CSCO Cisco Systems Inc 18.24 21.45 3.21 17.60% 4.57% 3.16%
INTC Intel Corp 16.25 19.14 2.89 17.78% 3.91% 2.65%
GOOG Google Inc-Cl A 396.63 427.69 31.06 7.83% 3.15% 4.44%
SBUX Starbucks Corp 12.97 17.39 4.42 34.08% 3.13% 1.23%
RIMM Research In Motion 66.36 73.50 7.14 10.76% 2.80% 2.93%
AMZN Amazon.Com Inc 75.63 88.79 13.16 17.40% 2.59% 1.80% 49.88%

>


ndxbyconstituent

Category: Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

13 Responses to “Not many stocks powering the rally”

  1. ben22 says:

    Michael,

    Very good points and this is some great data, there are many questions that are unanswered right now about recovery but the market seems to be pricing in certainty on that subject.

  2. Onlooker from Troy says:

    Wow. AAPL will save the world! LOL

    OK, I’m going long now. j/k

  3. Mannwich says:

    @Onlooker: At least we can all zone out like gadget zombies and play with our I-Phones when the shit hits the fan again. Everyone, it seems, has one these days, except for me. Time to go long AND buy an I-Phone, I guess!

  4. MRegan says:

    Did someone mention NVEC? Catman, you there? …them apples, eh?

  5. JustinTheSkeptic says:

    It all makes sense in a world that has a shit-load of cash and terrible investment choices. Call me skeptical, (oh! I guess I have already done that.) But this is a problem that is not going to be overcome by market traders such as GS et. al…. And the phonies in Washington. These paid shrills on tv should be ostracized to the farthest galaxy.

  6. Hoover says:

    If I’m reading your chart right, these nine stocks account for 42.4% of the index and 49.9% of the move. That doesn’t seem that crazy at all.

  7. DL says:

    It’s worth pointing out that since the March 9th low, the R2000 index has outperformed the SPX by at least 10%.

  8. I’m calling INTC a sell (though not a short) at and above $20. It could go higher but it is not justified. I originally called my buy under my former handle at $13.04 12/01/08 (I was just looking at Barry’s red Monday post that I commented at. Makes for some interesting reading)

    http://www.ritholtz.com/blog/2008/12/red-monday/#comment-129956

    A 50% move on a big cap in this market is a gift that I’ll take off the table(If I’m forced out of my current position, which I expect to be come ex-div day) and stuff into trading gold stocks for the big Chinese/Russian reserve currency devaluation/coup that is soon to occur

  9. Reply to Hoover: Fair point, except that many people — on and outside of Wall Street — might not realize that the indexes aren’t necessarily “the market,” and that a handful of stocks can paint a picture that could be at odds with what is really going on in this particular asset class. For those who are cynical or conspiracy-minded, it’s not hard to see how someone could benefit from moves in an index if he or she controlled the action in a few of its more heavily-weighted constituents.

  10. [...] Stocks driving the Nasdaq rally.  (Big Picture) [...]

  11. Mutant_Dog says:

    The recent relative (slight) outperformance of the Russell 2000 would suggest the opposite, a broader-based positivity.

  12. [...] « Laptop hunters are working (for Apple) Apple powered rally July 24, 2009 The Big Picture: In the Nasdaq-100 index, for example, one stock, Apple, accounts for nearly one-fifth of [...]