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Technology Stocks : Stock Swap
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To: Trader X who wrote (16968)3/7/2000 11:38:00 AM
From: Patrick Slevin   of 17305
 
I thought with all this recent activity SS would be on the Hot List by now.

Well, I sense if you look at the Relative Strength of the NDX over the SPX what you have is a market that is outperforming by a factor of 3.27 to 1. I don't think that is sustainable, particularly if you take into account that all the large cap NDX Stocks are represented in the SPX.

But say it is. That would suggest to me that at NDX 10,000--roughly where the DJIA is--the SPX would be perhaps 3,000. The resultant rise in the SPX aids a move higher in the INDU and so the spiral continues.

Besides, the DowJones Crew would certainly adjust the mix to accomplish their own ends. In other words, if GE underperforms then CSCO takes it's place; much like HD replaced S. Hypothetical of course, I do not envision GE getting cut anytime soon. But one would expect a tech stock to move aside for a tech stock.

Of course, they could mutter some mumbo-jumbo about how it would be more representative of the mix to replace a Kodak with a CSCO because of the market shift to digital cameras or whatever (ignoring the issue of silver amongst others) or popping in an AMZN over a PG because people are shopping online and not in a supermarket. Heck, they don't have to say why they changed the mix at all.

But I think there will be a political football issue that won't be suppressed easily.
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