There's no doubt that U.S. equities have been carried higher by a handful of mega-cap superstars. The S&P 500 is a market cap weighted index and its top holdings include:
- Apple (AAPL): 5.90%
- Microsoft (MSFT): 5.60%
- Amazon.com (AMZN): 4.05%
- Alphabet (GOOGL): 3.98%
- Facebook (FB): 2.29%
- Berkshire Hathaway (BRK/B): 1.45%
- Tesla (TSLA): 1.44%
- NVIDIA (NVDA): 1.37%
These 8 stocks account for 26.28% of the entire S&P 500. Here's a 3-month performance ChartList of all 8, along with the S&P 500:
Over the summer, the S&P 500 has been able to climb another 6.61%, which is crazy. But Berkshire Hathaway (BRK/B) is the only major component listed above to trail the overall benchmark index. The others are all beating the index that they primarily comprise, mostly doubling, tripling, or even quadrupling the S&P 500's return. So it doesn't take a whole lot of thought to realize that many of the other S&P 500 companies are lagging this index. It's definitely been a mega cap driven market. Outside of these massive companies, however, there are other S&P 500 companies that have performed well, but are now at key support levels. Continuing strength among this tier could be critical to the S&P 500 remaining in its current uptrend. Here are how these stocks have performed over the same 3-month period:
These also have easily beaten the S&P 500 over the past 3 months. However, each of these is testing key price, gap, and/or moving average support. If more and more of these companies (and other companies like them) fail to hang onto support, the more likely we'll see more selling later this month. Here are these 5 charts with key levels highlighted with annotations:
AMD:
BBWI:
NKE:
EBAY:
EL:
Keep in mind there are 500 companies in the S&P 500. I've discussed a total of 13 above. But the point here is that it will be more and more difficult for those mega market cap companies to carry the overall market higher if more and more technically-sound, mid-tier companies fail to hold support levels like the 5 identified above.
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Happy trading!
Tom
