Skip to main content

Posts

Showing posts from September, 2020

Analysis of Market Breadth

 The SPY is essentially at all time highs, but it is important to have some sort of skepticism here. It should be known that there are only a select few of stocks in the SPX index that are driving the majority of performance. For example, the SPX is at a YTD return of +6.07%, while the S&P 500 equal-weighting index (EWI) (each company in the SPX get equal weighting, instead of the index being weighted on market capitalization) has a YTD return of -13.42%.  This goes to show the complacency in identifying the negative aspects in relation to the SPX's return. There is a clear discrepancy within the individual market breadth, one that has rarely been seen before. There is also a growing complacency by investors who are clearly unaware of the underlying systematic risks at play below the casual surface area of price. For instance, we will examine Apple. Apple is about 7% of all holdings in the SPX tracking ETF, SPY. Also, the top 5 holdings for the SPY ETF (AAPL, MSFT, AMZN, FB, GO