Eye on the Market with David O. England

Last week, we learned the “Big Five” stocks definitely gave signals regarding the 2007 market top.

Today, I identify the current Big Five stocks to see if they are signaling a market top. 

Right now, the largest market cap stocks in the Standard & Poor’s 500 are Apple (NASDAQ: AAPL), Microsoft (MSFT), Google (GOOG and GOOGL), Amazon (AMZN) and Facebook (FB). Being that they are classified as the Big Five, their price can heavily influence the movement of the index up or down.

I designed a performance chart showing the current price action from January 2017 through mid-May. In March (black slotted line), the market topped and traded sidewise while the Big Five continued to rally and really outperform the market.

Earlier last week, institutional selling hit hard focusing on the financials and tech.  Although Wall Street must point a finger to a cause, many times it is simply profit taking.  However, with the market recovering, currently, the Big Five are not signaling a market plunge.  

So, here are the action points to think about:

First, do you know which stocks are driving the market?

Second, if so, do you track these Big Five stocks to signal the next market plunge?

Third, when profit taking hits, are your strategies in place to prosper during the next downturn, correction or even recession?

Fourth, if not -- why?

While Wall Street adamantly states you can’t time the market, I wonder if profit taking with the current top five market cap S&P 500 stocks will signal the next market plunge?

Next week, we return to the promised performance returns to compare with your holdings!

Remember, plan your work, work your plan, and share your harvest!
 
DAVID O. ENGLAND is the founder of the Eye on the Market-Training Academy (Davidoengland.com) and Associate Professor Emeritus of Finance. This column is for educational purposes only and is not intended as financial advice. Your decision to buy, sell, short or hold any investment product is a direct result of your decisions, free will, and research. Questions-send to thetraderseye@gmail.com