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

To: Follies who wrote (27464)	9/11/1998 4:00:00 PM
From: James F. Hopkins	Respond to of 94695

Hi Dale; Sounds right, in the S&P it takes 50 out of the 500 to eat up 50% of the index, ( 10% of the stocks controls 50% of the index )..with the NDX100 it gets way more out of hand, with 4 stocks out of 100 , or ( 4% controls 50% ) but in both cases the index can deceive a person as to how the market is really doing. I won't get into all the details, but you know something is fishy, when you take a spread sheet and find the average market cap of all 500 stocks lumped together dropped 3.5% back in early July while at the same time the index went up. In short the sell off had started before the index ever showed it. In fact the Index went the other way, to where there was at least a 7% error in it's top, if you had tracked the aggregate of the market cap, instead of just the index itself. About the time a bottom is reached I expect to see the reverse ie average market cap will start going up before the index shows it. This is one reason I say TA on an index is voodoo. It can over and under shoot it's real total value, as much as 7% on each end that I know of, BUT does NOT do this all the time, so how do the "index" TAers know when the tops or bottoms are real, or foam. Jim