The S&P500 is a capitalization weighted average. Thus the largest capitalization stock (price * shares) has a much higher influence on the average then the smallest. Apple, Exxon, Google, and Microsoft produce just under 10% of the S&P500 results. The top 10 holdings account for 17.75% of the S&P500 gains and losses. I do not know what the weighting is for the lowest weighted stock, but I’m sure if it moved 10% it would make very little change in the S&P500. One of the intereting things to watch is the SPY (an ETF which mimmics the S&P500) compared to the RSP (an ETF which mimmics the S&P500 if each stock were equal weighted). Currently the SPY is up 3.21% over the last 13 weeks while the RSP is up 3.51%. To me that indicates the smaller weighted stocks are producing more gains than the larger weighted stocks. Thus the market seems to be ok. It is when the largest weighted stocks produce better results than the smaller weighted stocks when there is a problem. That presents a picture where the S&P500 index says everything is great, but in reality most stocks are not going up.
So I was wrong for a week. The Fed came out this week, not last week, and caused a market gain. In the long run just remember that Niall Ferguson and Larry Kotlikoff, two of the best economists in the world, both indicate the total US federal debt is really greater the 210 TRILLION dollars when all programs are counted. That is three times greater than to total gross national product of the world. This cannot end well. Be ready to sell. BTW SGold is the best performing fund on my 13 relative rank list but still #96 on my 39 relative rank list. Some feel that is an indication of a lack of confidence governments, government debt, and paper money.
IBD TBP’s Current Outlook is “Confirmed Uptrend” – time to invest.
My current investments:
SAutomotive has a price of $55.62, a sell price $53.51, a relative rank of 56, and is a sell since it is time to invest.
Nordic has a price of 44.71, a sell price 42.75, a relative rank of 13, and is a hold in my IRA #2.
SSoftware&ComputerServices has a price of 121.61, a sell price 115.72, a relative rank of 06, and is a hold.
SAirTransportation has a price of 59.96, a sell price 58.74, a relative rank of 20, and is a hold.
SBiotechnology has a price of 214.43, a sell price 203.71, a relative rank of 01, and is a hold.
SBiotechnology is my #1 fund (and I own it), but it and SHealthCare my #2 fund, do not have increasing deviations from their 39 week averages so are not buys.
Nordic should have been sold last week in my IRA #1 but I missed it. Nordic will be sold this week even though I have not held it for 90 days and will pay a 1.5% fee.
OTCPortfolio has a price of 82.91, a sell price TBD, a relative rank of 03, and is a buy in both IRA #1 and IRA #2.
My portfolio changes this weekend:
IRA #1 – Exchange Nordic for OTCPortfolio
IRA #2 – Exchange SAutomotive for OTCPortfolio
My portfolio market exposure after this weekend’s changes
IRA #1 – 100% invested
IRA #2 – 100% invested