Bringing Back The Smart Money Index
We have been hearing a lot of complaints about how weak breadth has been, how only a few stocks are pulling the indices higher. Whether bad breadth will ultimately be a problem or not remains to be seen. You have to keep an open mind that maybe more stocks will start to participate in the future, it doesn’t always end badly.
The image below tells you the whole story. The mega-cap names that have a larger effect on the SP500 have outperformed their little brothers on a 1, 3, 6, and 12-month basis. The lower cap names are all lower in every time-frame.
According to Finviz, there’s 21 mega-cap names, 571 large caps, 1041 Mid caps, 1621 Small caps, 1229 micro caps, and 599 nano caps. When you take the breadth of the entire market and plotted against the SP500 you more than likely will see divergences. It’s not fair to compare 4,490 stocks not in the SP500 to the SP500.
Maybe it’s not too late get reacquainted with the smart money index of the 90’s, $OEX. The index is composed of the largest U.S. companies in the world.
This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained in this blog constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned in this blog. The stocks presented are not to be considered a recommendation to buy any stock. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.
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