How Narrow A Nasdaq Rise?

Mike Panzner put out an interesting piece last week.

The Nasdaq-100 has been on a tear since bottoming on March 5th, gaining 12.77% through yesterday’s close. Yet, if you break the technology-laden bellwether down into its 100 constituent members, it paints a slightly disconcerting picture. Despite all the talk from equity bulls about the health of the market and the rally’s
sustainability, the advance has been narrowly based.

Apple, for example, has played a major role in pushing the index higher, equating to more than 20% of the overall gain. The rallies in Apple, Google, and  Intel account for nearly a third, while seven stocks comprise half the move in the NDX. Finally, 13 out of 100 stocks — 13% — are responsible for two-thirds of the overall advance.

While this heavy lifting by a small number of shares does not mean the index can’t go higher still, history suggests rallies that lack widespread participation sometimes lack long-term staying power.

As the table below shows, most of the Nasdaq’s gains are unusually concentrated last quarter in about a dozen stocks.

Table of Nasdaq Gainers:

Symbol Name  3/5/07
Close
6/28/07
Close
Net Change
Points
Net Change
%
% of Overall
Move in NDX
Cumulative %
NDX Nasdaq-100 Index 1712.94 1931.67 218.73 12.77%  
AAPL Apple 86.27 120.56 34.29 39.75% 21.63%
GOOG Google 440.81 525.01 84.2 19.10% 6.20%
INTC Intel 19.10 23.92 4.82 25.24% 5.13% 32.96%
QCOM Qualcomm 39.14 43.46 4.32 11.04% 4.54%
AMZN Amazon 37.04 68.89 31.85 85.99% 4.53%
MSFT Microsoft 27.54 29.83 2.29 8.32% 3.94%
ORCL Oracle 16.37 19.85 3.48 21.26% 3.90% 49.88%
RIMM Research in Motion 134.44 165.55 31.11 23.14% 3.03%
PCAR Paccar 67.78 87.45 19.67 29.02% 2.86%
CSCO Cisco 25.44 27.85 2.41 9.47% 2.73%
DELL Dell 22.53 28.45 5.92 26.28% 2.59%
CHRW CH Robinson 49.97 53.16 3.19 6.38% 2.49%
NVDA Nvidia 28.74 41.99 13.25 46.10% 2.47% 66.05%

Data courtesy of Mike Panzner

>

What might this mean?

Are Technicals Waning as a Positive Influence? I’m not exactly sure — What I’d like to see is how past rallies have moved forward in terms of leadership.

Is it unusual to have 13 stocks in the NDX’s 100 account for 67% of the aggregate advance? Is this unusually narrow? When has this occurred, early or late in a run?

I don’t know the answers to these, but I am curious . . . 

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