To All; What you won't see on CNBC, An Index can be a complicated animal, and here are some tidbits. I will stick just with the DOW as to try to stay on subject,and not over complicate her to much.
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Lets say you track the volume, vs the average volume, well
inside just how much of that volume is up volume and or down
volume. does it almost match the up down volume on the
NYSE..today it ran more to the Down side than the NYSE ratio
was about 27up for 38down, the Dow was 28up to 54down, now
this is ball park figures just looking at the cumulative end
of day results, but it gets one close enough to notice any big
changes. Actually I had the Dow showing.
total vol= 86,438,000,,= 6.17% more than 3mo avg.
up vol 28,017,900.00
down vol 58,420,100.00
(184,237,332) <cashflow
(9,259,071,306) <Cap move
50.25621683 ,lever
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I can't tell yet if the 50 to 1 lever is good bad or ugly,
but it's scary to look at..<G>
Today it means for every dollar taken out of the Dow stocks
the market Cap of said stocks dropped $50.
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Yes the Dow stocks lost over $9 Billion in market cap while
the index was barley down -19.82 or only .22%,
Now isn't this s**t you don't see in CNBC. <G>
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My market cap weighted index fell more than the actual DOW
Price weighted one, but not a lot it was down .40%.
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I will hopefully clear up some terms at least to the way I use them,
What I'm doing is looking at the internals of the Index,
I actually dissect it into 3 "market cap" categories to get
a picture of how liquid it may or may not be.
It's not like honey, the less liquid the Dow is the faster it
tends to move. There are many external forces on the DOW,
interest rates, the currency market, and so on, these things
effect it differently at different times, a lot depends on
it's internals as to how externals will effect it.
Just like you driving down the road, the condition of your tires
are one thing the condition of the road another. You may want
racing slicks on a dry road, and deep treads on a wet one,
or chains in the snow. No one internal condition will match the
other all the time. I see I'm getting off track here a little,
but I'm saying all this to impress any relatively new person
to the market, that much goes on the experts never tell you.
If some one is going to say, like how interest rates will effect
the index, do they really understand the index and what condition
it is in ?
BTW pick hot peppers after a hot dry spell, and they will be
much hotter. Why did I think of that. ? hmmm
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Back to the Dow, I started my spread sheet some time ago,
at first it was just a head and tail type thing, to try to
see when the tail is wagging the dog.
Now I have it in three parts..and even check the volume on the
individual stocks in each part.
1 is the top 11 stocks over 100B in cap
2 is the 9, from 99B down to 30B
3 is the 10, below 30B
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Each section also keeps up with the change of market cap to
that section relative to the up or down, so I can tell you
that the Top 11 are much more liquid than the rest.
With out going to far I want to say the pull back in KO
recently doesn't look like a good sign for the market to go up,
while the Dow is still liquid, the smaller ones have been easing
down, and on less than normal volume.
In other words it's not ominous but there sure are some warning
signs in the internals, and if any external force hits her she
could get worse real easy.
Jim
Ps if you just TA an index you can get fooled really bad,
as what you see is not always what you get. The Dow is tricky
and as an index it can lose market cap value even when it goes
up...like maybe you see an up day on the index with good volume.
BUT if KO is selling off 3points on 10million shares , while
say IBM gains 3 on 3.4M they offset one another to the index,
BUT in reality KO lost much more money. To top it off say UK is up
2 on 1m shares. Well the dow will look like it went up on
"good" volume, but the liquid ran out, and the good
volume was really negative, but the charts and the news media
will almost always miss the internal action.
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Tech and the internuts are holding the broad market up, but
except for MSFT they won't offer a lot of support if
GE, KO , and MRK ease down much more.
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Jim |
