Overextended rally
S&P 500 ended their longest bear market since 1948! But the rally has been powered by only a handful of companies, mainly the big tech, such as Apple, Microsoft, Meta, Nvidia, and recently Tesla.
Therefore, the key question now is whether such rally is sustainable?
Stocks covered in the video (technical analysis) – SPY, Apple, Tesla, Google + Option trades
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ZnWC : Do you have data to show that the rally is powered by a handful of companies or just your perception? You look at the heatmap rally occurred in many industry.
tia septianty ZnWC: wc:39bb93c7-44fb-445e-a3f0-c6008e18820b@1?bridge=https%3A%2F%2Fx.bridge.walletconnect.org&key=52a488e10bb2fa2c9e9c5537bbc58af38f932261fc6b6d3bf6081f7681d1219c
MoneyComesMoneyStays : It's really no different than what's happening in America as a whole. Wealth is being concentrated at the top and of course neither one will be sustainable in the long run.
Cow Moo-neyOP ZnWC: Can I check what is the period that you have filtered? Anyway, a heat map can show that all industries are green, but it does not show their weightage in S&P500. If you were to take out the top 5 to 7 companies from S&P500, it isn’t up that much for this year. These top few companies actually accounted for more than 100% of S&P50 gain’s
Here’s a screenshot:
Cow Moo-neyOP Cow Moo-neyOP: Sources:
axios.com/2023/...
Just 7 companies are carrying the S&P 500 in 2023
Cow Moo-neyOP Cow Moo-neyOP: To add on, in my video, I did share that more industries and stocks are participating in this rally (I.e market breadth) recently
ZnWC : The article you used is dated 18 May 2023 and the period chosen is from 12 Dec 2023 to 5 May 2023. 7 tech stocks chosen were at its lowest in end Dec 2022 when FED increased rate agressively and inflation is all time high. The article suggested the rally is not sustainable due to uncertainties like recession and debt ceiling risk.
There's a flaw in the article - rally for 7 stocks started from Jan to May this year while FED continues to raise rate. Clearly the rally is due to other factors such as fundamental in the company remains strong and US economy is recovering (based on strong labour market).
The rally brought about by AI also brought hope to tech stocks. ChatGTP was released in Nov 2023 and gain popularity in Jan 2023 til now. Despite the uncertainty, there are more positive factors driving the rally at least til the end of 2023.
Cow Moo-neyOP ZnWC: Sorry I think we are going off topic a little bit - the intention of showing the articles wasn’t to discuss on the reasons (eg AI, resilient economy, strong labour market) behind the rally for the first 5 months. In fact, I have covered these factors in my video.
The purpose of showing the articles was to address your initial question on the data showing that the index’s rally has been driven by major tech stocks.
ZnWC Cow Moo-neyOP: I didn't go off the topic. I answer the question if the rally is sustainable based on the article you used.
Cow Moo-neyOP ZnWC: As shared, and to clarify again, the purpose of sharing the 2 articles wasn’t to discuss on whether the rally is sustainable.
In your very first post, you asked if I have data to show that the index rally was driven by a few companies, or is it just my perception? Hence, I shared the 2 articles to address this question. And to be more specific, focus on the chart below:
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