{"id":5819,"date":"2024-07-05T00:02:25","date_gmt":"2024-07-05T00:02:25","guid":{"rendered":"https:\/\/businesstriumphs.com\/index.php\/2024\/07\/05\/unmasking-market-moves-why-focusing-on-individual-stocks-beats-indexes-in-2024\/"},"modified":"2024-07-05T00:02:25","modified_gmt":"2024-07-05T00:02:25","slug":"unmasking-market-moves-why-focusing-on-individual-stocks-beats-indexes-in-2024","status":"publish","type":"post","link":"https:\/\/businesstriumphs.com\/index.php\/2024\/07\/05\/unmasking-market-moves-why-focusing-on-individual-stocks-beats-indexes-in-2024\/","title":{"rendered":"Unmasking Market Moves: Why Focusing on Individual Stocks Beats Indexes in 2024"},"content":{"rendered":"
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Many chatter and mentions of weak or narrow breadth are floating around these days. I plead guilty as well.<\/p>\n

I want to approach this from another angle using some of the major US stock indices for this article.<\/p>\n

I usually examine the market using sectors or a growth\/value\/size breakdown, with the S&P and Dow Jones indices playing a major role. But there is more.<\/p>\n

Major US Stockmarket Indices<\/h2>\n

The first RRG shows the rotation of some of the major US stock market indices against the benchmark S&P 500.<\/p>\n

I have added the table below the graph as a legend for the symbols on the tails, as they may not be so mainstream.<\/p>\n

The tails and the accompanying performances are shown over a five-week period. All the broader indices are camping inside the lagging quadrant and traveling at a negative RRG-Heading, while the narrower-based indices are inside the leading quadrant and on a strong, 0-90 degrees RRG-heading.<\/p>\n

There is no index inside the improving quadrant or the weakening quadrant. This indicates the clear split between these two groups.<\/p>\n

The only exception concerning \u201cbroader\u201d indices is the Nasdaq Composite index ($COMPQ) with 2500 stocks. However, this index is, very, heavily tilted toward the software & It services and technology equipment stocks. The exception on the \u201cnarrower\u201d indices is the DJ Industrials index, which has a relatively low exposure to the technology sector, also because of its price-weighted approach.<\/p>\n<\/p>\n

When I remove $COMPQ and $INDU and set the tail length to 3 weeks for better visibility, this is the chart that remains. I found it interesting that the further you go to the right, the smaller the index becomes in terms of stocks in the index, not necessarily in market capitalization.<\/p>\n

NY FANG Beats All<\/h2>\n

The next step was to zoom in on the rotation of $NYFANG.<\/p>\n<\/p>\n

When I set the tail length to 30 weeks, the exact same indices show up on top, with $NYFANG handsomely beating all other indices in this group. When you open up this RRG, live (click on the chart), you have to scroll back to 3\/13\/2023 before $NYFANG drops from the first place over a 30-week period. That\u2019s a pretty impressive period (trend).<\/p>\n

Even Inside The NY FANG Index, The Base is Narrow<\/h2>\n

And finally, let\u2019s zoom in on the members of the NY FANG index.<\/p>\n<\/p>\n

This RRG shows the rotation for the NYFANG members against $NYFANG. The first observation is a high concentration of stocks inside the lagging quadrant. Except for SNOW and AMD, they have beaten the S&P 500 over this 5-week period. But not $NYFANG. Only TWO stocks have outperformed $NYFANG over this 5-week period: TSLA and NVDA.<\/p>\n

Looking back, 30 weeks shows that only NVDA, META, and NFLX have beaten $NYFANG.<\/p>\n

The big spread between the top and bottom of the list, +38.4% for TSLA and -1.8 % for AMD, also shows that the performances are very stock-specific. Even within the same sector, big differences show up. MSFT (Technology\/ software) shows an 11% gain vs. SNOW in the same group, with a 4.9% gain.<\/p>\n

The difference is even bigger in semiconductors. NVDA (Technology\/semiconductors) +17% against a loss of 1.8% for AMD in the same group.<\/p>\n

The main takeaway from all this, IMHO, is that the foundation is indeed narrow and concentrated in large cap, offensive\/growth stocks. This group of stocks can still keep the S&P 500 going up or at least remain sideways during transition periods. This is caused by individual stocks rotating through very strong, relative trends.<\/p>\n

As long as this situation persists, I believe it will be much more important to focus on individual stocks first, then sectors, and only then the broader market.<\/p>\n

Happy Fourth Of July, \u2013Julius<\/p>\n<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Many chatter and mentions of weak or narrow breadth are floating around these days. I plead guilty as well. I want to approach this from another angle using some of the major US stock indices for this article. I usually examine the market using sectors or a growth\/value\/size breakdown, with the S&P and Dow Jones […]<\/p>\n","protected":false},"author":0,"featured_media":5820,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-5819","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stock"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/5819","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=5819"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/5819\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/5820"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=5819"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=5819"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=5819"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}