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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 683.310.0%Nov 12 4:00 PM EST

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To: James F. Hopkins who wrote (2813)12/26/1998 1:11:00 PM
From: Follies  Read Replies (1) of 99985
 
Jim,

I reread your post and the part I'm not sure about is...

..well index tracking funds buy more of the
gainers and sell more of the losers, every day


the only reason a fund has to sell is if there are net withdrawls (or of course a component change) in which case they sell LESS of the losers because they make up a smaller percent of the index.

Do you agree that the index correlates 100% to the total market cap of its components? At least, I think that's how it works. BWTFDIK? IUTKJ!

dale
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