Sooooo I read that Amazon, Netflix, microsoft, and Apple account for 40% of the overall +7% gain in the market. Looking for opinions on the health of the market.
I have heard this argument for ever. It's all about leadership. It's a sign of a healthy market. I would be worried when speculation starts in the crappy low grade stocks.
What I'm trying to figure out is the actual leadership though, lets say those 4 stocks corrected -5% at the same time, the market would go negative for the year, don't think thats a healthy market. Think you can have leadership but everyone needs to follow along. Still doesn't make sense that the advance/decline is making new highs with only 4 stocks leading the way though. Thats what I'm trying to figure out. Charts are helpful, with no lines though they mean nothing to me anymore lol!!!
Haven't we been saying the same stuff for the last 5 years ? I heard the same stuff when AMZN was at 700 and APPL at 90.
You need to look at the bigger picture. The NYSE A/D line will not keep making new all time highs day in and day out without the participation from the broader set of stocks on the NYSE. That's the reality. The FANG stocks stuff is the perma-bear spin. The Hussman's and Northman's have to feed some soup to their followers. They point to the FANG. If they spoke the truth, they will left with no subs/investors.
Nuff' said.
Sorry your not understanding my point. The market is up +9% with about 7% of that on 4 stocks. Then they say the broader market is around breakeven. If this is true why is the a/d line hitting new highs. Shouldn't the market overall then be much higher why only up +2%. Things don't add up. None of this by the way makes a difference for my style of trading I don't really care but seems off to me.
A/D line has got nothing to do with % move. It's a measure of advancers-decliners. Even if a stock is up by 1 tick above prior day close, it's considered an advancer. If the A/d line is positive it means there are more advancers than decliners, hence money is flowing into the broader market, as opposed to a narrow set of stocks. That can only be considered healthy. If you think otherwise, you better have some strong reason to refute research done on 100 years of A/D line data.
As for the FANG stocks contributing heavily to the Nasdaq, it's not surprising given that it's a market-cap weighted index. Large cap stocks contribute heavily to the index. That's not a sign of a unhealthy market, rather the way the index is constructed. It's better than the DOW, which is price weighted.
