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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: William H Huebl who wrote (20338)	6/15/1998 1:48:00 AM
From: James F. Hopkins	Read Replies (1) \| Respond to of 94695

Bill; I'm working up some new indexes based on the S&P 500, weighted the same but ( in baskets ) that breaks up the S&P... Firday it was the DRUG stocks that "triggered" the rally, when they broke to the upside, particularly BMY they pushed the index up enough that the index funds and their CP trading kicked in. ------------------ The first 25 stocks in the S&P500 hold over 33% of the market cap. in that 25 you have 5 DRUG STOCKS PFE , MRK, BMY, JNJ , LLY, -------------------- pfe AND bmy going up triggered the CP trading, at that time MRK was down bad, and while she lost 1/16 for the day, she bounced up 2-1/16 off her bottom. -------------------- Looking at the interday charts, it looks like if any one or two in the first 25 has a big enough move up or down then that one or two can move the index enough that the rest will follow. In fact they must follow..it's the only way the index funds can track the index and make up for not being in on that first one or two.. they just fire a salvo buying ( or covering ) a wider basket. I expect to find the same thing on the down side, if one or two in the top 25 drop hard, more than likely they continue to hold the issues , but short a wider basket against the box. ------------------ The S&P don't work like the DOW because of the weighting.. a 4pt move on BMY that controls 1.2% of the index shakes things up , way more than a 4pt move say on TUP which only controls .02% of the index. Another way of saying it between those two for each 1 pt move, BMY will effect the S&P500 index 60 times more than TUP...keep an eye on the supercaps..they move the index. -------------------- To add to the above apprx ..after the first 25 in the S&P which control 33%; the next 15 control 17% ..hence the first 50 stocks control 50% of any swing in the index..and it takes the other 450 to equal them. Go from 50 to 140 stocks and you have 75% of the index..the other 360 only control 25%. Jim