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Market Commentary – May 17, 2023
Market Commentary
Published: 05.17.2023
In recent weeks there has been much written and said in the financial press regarding the narrow breadth, or narrow participation, within the market. The graphs below illustrate this in different ways. The first graph shows the percent of New York Stock Exchange (NYSE) listed stocks that are trading above their respective 50-day moving average. As this graph illustrates, while the S&P 500 and the NASDAQ 100 indexes have advanced off the December lows, the number of stocks participating in the advance has actually remained quite low near 40%.
Chart from StockCharts.com
Another way to view market participation is to compare a weighted index (the way most indexes are created) with its equal-weighted counterpart. The graph below shows both the weighted and the equal-weighted version of the NASDAQ 100 Index. This index is being heavily skewed by the influence of 8 tech stocks. The lack of participation can be seen in this graph by the lagging performance of the equal-weighted index that is NOT as skewed by the 8 leading tech stocks.
Chart from FastTrack.net
The graph below shows the weighted (regular) and the equal-weighted S&P 500 Index. This graph shows much of the same characteristics as the graph above. The graph below shows both the weighted and the equal-weighted version of the S&P 500 Index. This index is also being heavily skewed by the influence of the 8 leading tech stocks. The lack of participation can be seen in this graph by the lagging performance of the equal-weighted index that is NOT as skewed by the 8 leading tech stocks.
Chart from FastTrack.net
Best,
The Trademark Capital® Team
This material is intended for informational purposes only and should not be construed as legal, accounting, tax, investment, or other professional advice. Trademark Capital’s investment strategies are built using quantitative, proprietary algorithms that are designed to identify and react to changing market conditions. However, investors should be aware that no investment strategy or risk management technique can guarantee returns or eliminate risk in any given market environment. As with all investments, Trademark Capital Management’s investment strategies are subject to risk and may lose money. The investment strategies presented are not appropriate for every investor and individual clients should review with their financial advisors the terms and conditions and risk involved with specific products or services. Due to our active risk management, our managed portfolios may underperform during bull markets. Past performance is no guarantee of future results.