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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Monty Lenard who wrote (2864)	12/26/1998 10:17:00 AM
From: James F. Hopkins	Read Replies (1) \| Respond to of 99985

Hi Monty; Got the url; I think they have a high next year estimate on the p/e. But what the heck tulip mania can go on, and will go on, as long as the sharks can squeeze the shorts. Things go all to hell when shorts go broke. ----------- Turn on your ICQ, I did the SPDRs relative weighting, looked up a couple, and found two not in the S&P.. but for the most part they are just about all in the S&P & cover it , over 98%.. -------------------- The angel on this is knowing that index funds tend to cause money to flow towards large caps ( if all else is equal ) cap size has a benefit of being bought more as it goes up. Big caps get a down side cushion in any big down turn as being liquid managers of funds other than index funds tend to sell them off only after they get out of the less liquid. Value line has pointed this out for years. The Safety factor in Big caps is so well known, (that it's getting over played ) but still it won't go away over night. -------------------- Back to the angle of the nine sector SPDRs, I get the mean average of x issues / 500 to obtain the Mid value of S&P weightings, and see if the Sector as they created it has stocks in it were the S&P weights are above or below the average for the S&P and by how much. So I come up with LRG MID and SMALL, of course the Small is not like actual small caps who are never in the S&P just small relative to the mean weight of the S&P., ----------------------- Next I covert the S&P weight of each issue in each sector to were it would be if the total weights = 100%.. X / by sum of weights..= relative S&P weight , and compare that to how the SPDR is weighted to see if there is any noticeable skew in the weights. -------------------- This angle does is not an end all or ultimate way of picking, it's just showing were the general advantage of cap weight lies, and is one factor to include in any strategy. At times smaller caps tend to do real well, and it can be played that way when it runs. Splitting the S&P into 9 Sectors, often over laps some, and produces more of a hybrid type sector than a real focused one. ie Like XLB, it's Chem and basic materials, gold & copper but more weight on the CHEM side..it's weight is 7.7Pts BELOW the average for the S&P..it will run better when small caps run or the Chem ind takes off. Other wise it's lack luster , or poor. On the other hand XLP is about 10Pts above the average of S&P stocks, lots of drugs at the top of it, with KO and it has the best Cap advantage of them all. XLK is the most focused of the funds and it's in tech without many internuts , and also has some Cap advantage it's 5.4pts over the average. Enough of this for now, if you have ICQ on I'll ship them back, and thanks for sending them to me to start with, it saved me a lot of time. There is one other thing I could do, and that's compare the actual market cap of the issues in each sector to the way the Amex has them weighted, but I doubt I'll see much divergence there. Also compare the P/e s of one fund to the others, and look at the dividends within them, so far the Sector SPDRs don't offer owners dividends like the SPY and MDY..they may in the future, but for now it's something to consider, as not getting them is part of the expense of owning them. Your sheet didn't have the div in it but I can find that easy enough. Jim