How Narrow A Nasdaq Rise?
Mike Panzner put out an interesting piece last week.
The Nasdaq-100 has been on a tear since bottoming on March 5th, gaining 12.77% through yesterday's close. Yet, if you break the technology-laden bellwether down into its 100 constituent members, it paints a slightly disconcerting picture. Despite all the talk from equity bulls about the health of the market and the rally's sustainability, the advance has been narrowly based.
Apple, for example, has played a major role in pushing the index higher, equating to more than 20% of the overall gain. The rallies in Apple, Google, and Intel account for nearly a third, while seven stocks comprise half the move in the NDX. Finally, 13 out of 100 stocks -- 13% -- are responsible for two-thirds of the overall advance.
While this heavy lifting by a small number of shares does not mean the index can't go higher still, history suggests rallies that lack widespread participation sometimes lack long-term staying power.
As the table below shows, most of the Nasdaq's gains are unusually concentrated last quarter in about a dozen stocks.
Table of Nasdaq Gainers:
| Symbol | Name | 3/5/07 Close |
6/28/07 Close |
Net Change Points |
Net Change % |
% of Overall Move in NDX |
Cumulative % |
| NDX | Nasdaq-100 Index | 1712.94 | 1931.67 | 218.73 | 12.77% | ||
| AAPL |
Apple | 86.27 | 120.56 | 34.29 | 39.75% | 21.63% | |
| GOOG |
440.81 | 525.01 | 84.2 | 19.10% | 6.20% | ||
| INTC |
Intel |
19.10 | 23.92 | 4.82 | 25.24% | 5.13% | 32.96% |
| QCOM | Qualcomm | 39.14 | 43.46 | 4.32 | 11.04% | 4.54% | |
| AMZN | Amazon | 37.04 | 68.89 | 31.85 | 85.99% | 4.53% | |
| MSFT | Microsoft | 27.54 | 29.83 | 2.29 | 8.32% | 3.94% | |
| ORCL | Oracle | 16.37 | 19.85 | 3.48 | 21.26% | 3.90% | 49.88% |
| RIMM | Research in Motion | 134.44 | 165.55 | 31.11 | 23.14% | 3.03% | |
| PCAR | Paccar | 67.78 | 87.45 | 19.67 | 29.02% | 2.86% | |
| CSCO | Cisco | 25.44 | 27.85 | 2.41 | 9.47% | 2.73% | |
| DELL | Dell | 22.53 | 28.45 | 5.92 | 26.28% | 2.59% | |
| CHRW | CH Robinson | 49.97 | 53.16 | 3.19 | 6.38% | 2.49% | |
| NVDA | Nvidia | 28.74 | 41.99 | 13.25 | 46.10% | 2.47% | 66.05% |
Data courtesy of Mike Panzner
>
What might this mean?
Are Technicals Waning as a Positive Influence? I'm not exactly sure -- What I'd like to see is how past rallies have moved forward in terms of leadership.
Is it unusual to have 13 stocks in the NDX’s 100 account for 67% of the aggregate advance? Is this unusually narrow? When has this occurred, early or late in a run?
I don't know the answers to these, but I am curious . . .
Monday, July 02, 2007 | 06:49 AM | Permalink
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A 10-day moving average of new highs/new lows confirms the narrowed market, showing a severe divergence between the index and the MA.
Posted by: Winston Munn | Jul 2, 2007 8:34:03 AM
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