Not many stocks powering the rally
By Michael Panzner - July 23rd, 2009, 11:00AM
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.
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| 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% |
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July 23rd, 2009 at 11:04 am
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.
July 23rd, 2009 at 11:05 am
Wow. AAPL will save the world! LOL
OK, I’m going long now. j/k
July 23rd, 2009 at 11:08 am
@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!
July 23rd, 2009 at 11:23 am
Did someone mention NVEC? Catman, you there? …them apples, eh?
July 23rd, 2009 at 11:25 am
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.
July 23rd, 2009 at 11:26 am
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.
July 23rd, 2009 at 11:59 am
It’s worth pointing out that since the March 9th low, the R2000 index has outperformed the SPX by at least 10%.
July 23rd, 2009 at 12:42 pm
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
July 23rd, 2009 at 1:00 pm
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.
July 23rd, 2009 at 1:23 pm
see also: Nifty 50
http://www.investopedia.com/terms/n/niftyfifty.asp
July 23rd, 2009 at 1:36 pm
[...] Stocks driving the Nasdaq rally. (Big Picture) [...]
July 23rd, 2009 at 4:26 pm
The recent relative (slight) outperformance of the Russell 2000 would suggest the opposite, a broader-based positivity.
July 23rd, 2009 at 8:08 pm
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