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March 24, 2023 – I’ve covered this before but it bears repeating. Market Breath is poor (as measured by the number of stocks advancing to the number declining). So why are the indexes relatively strong? Well most of the institutional money must stay invested so where do you go? To the strongest sector(s) that are big enough to absorb the funds. The saying is “Wearing the cleanest of the dirty shirts”. Right now the “cleanest” sector is Technology.
To top it all off, most sectors are Capital weighted, that is the number of shares times the stock price. (The Dow is one exception where it is price weighted.) Thus the big, high prices stocks (i.e. technology) have the biggest effect on the value of the index. The result is “maybe this market is not as strong as the index says it is” since the strength may be concentrated in only a small number of stocks.
Banking & Financial jitters continue especially in Europe where many are waiting for “the other shoe to drop”. Here in the US, the FED is loaning out short term money to banks to maintain their liquidity (& viability). About $160 billion over the past 2 weeks compared to typical levels. The market is concerned about credit risks, no doubt about it.
The Short Term Sector Strength table is shown above.
Have a good week and remain on guard. It may not be over just yet. ………. Tom ……….. *Price chart by MetaStock; table by www.HighGrowthStock.com. Used with permission. *