Good point. We may see a massive restructuring of BOTH the DOW and S&P to include more new tech, which seems to be on a LT winning vector.
After all and DON'T forget, these markets indexes compete and the marketing of a winning index is all part of the game.
If the DOW is structured with too much old vs new, and becomes non-representative of what that index should represent, then it will continue to succumb to mispresentation and consequently selling pressure.
It's funny, but the market's like an organism. Like a bacteria adapting to drugs that used to kill it.
In the past, the entire market used to be very much reigned in by direct interest rate rises. Now, certain stocks and segments have learned to adapt against that "cure".
It's learned how to ameliorate that attack, and be less sensitive to it by using stock to fund what direct borrowing used to do.
What could be a large cattle prod for the the NAZ (better than than interest rate rises) would be a weaning of margin loans on all stocks 0, ie, all cash trades.
That's how you get the NAZ side to slow down, if you're predisposed in a free market economy to having someone make that decision.
Frank Zarb indicated a few weeks ago that a message has already gone out raising to allow houses to raise margin requirements, and I'll bet they go higher and on more stocks before to much longer. Tacitly, of course.
Steve |
