Wednesday, 15 February 2012

Market Breadth - Weak without Apple

This may sound strange considering how many companies there are in the stock indices, but most of the gains/performance in the stock market over the last couple weeks have been caused by 1 company: Apple.

Source: WSJ

As seen above, Apple makes up 3.8% in the S&P and even more in QQQ, somewhere around 15%.  Below is Apple's performance last few weeks:

That huge spike since mid January is what has been keeping the stock indices from being flat or down.  Its a bit unusual to say the least that one company has such a big impact on the overall market.  

As Bespoke Invest notes: 
While it may seem as if the market has been doing well lately, it really hasn't done anything over the past ten trading days.  Since February 3rd (a Friday), the S&P 500 is flat, and the Dow is actually down about 100 points.  While Apple -- with its huge weighting in the S&P 500 and Nasdaq -- has really helped buoy the market over this time period, underlying breadth has weakened, and the VIX fear index has shot up 25%.  
So will be interesting to see how the market reacts as today's negative reversal in Apple drove the market drop to a significant degree.

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