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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 683.310.0%4:00 PM EST

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To: James F. Hopkins who wrote (2813)12/26/1998 12:46:00 PM
From: Follies  Read Replies (2) of 99985
 
Jim

I don't know if I agree with you about the SPX calculations but my gut tells me you haven't got it quite right.

If a stock goes up and all the others stay the same, the weighting will go up for that stock but your holding of that stock goes up propotionately so you don't need to buy more of it.

Could you give me a two stock example of what you mean?

I certainly agree that droping off poor performers and adding better performers make the index out perform the overall market, and issueing stock will of course change the weighting, but I think price movement on CAP weighted indices mirrors CAP propotional holdings, no need to adjust.
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