The weekly Market Update is posted and includes the following;
A couple of days ago, Bespoke reported that the tech sector had grown to 24.7% of the S&P 500. Sector weightings can be very constructive for warning of trouble ahead. In 2000 of course tech grew to more than 30% of the index which preceded a 50% decline. Then in 2007 the financial sector grew to about 20% of the S&P 500 which preceded a 50% decline. Twenty-25% in tech might not be problematic the way 20% in some other sectors might be but growing to 30% would be very concerning as an expression of some form of excess in the market that is likely to be corrected. Last week we mentioned a reformulating of the telecom sector to take in media and entertainment companies which could easily result the tech sector dropping from 25% of the S&P 500 to as low as less than 20%as some of the largest names in the sector are due to be reclassified. This creates something of a dilemma for watchers of sector weightings…unless a bear market starts before the change happens. An excess, to the extent there is one, wouldn’t simply be erased by reshuffling the deck.
Please click through to read the entire update.
I have some very exciting news. In addition to my blogging with AdvisorShares I have also started blogging at themaven.net. This link is my first post and explains in more detail what I will be doing but the short version is it will be more like how Random Roger first started out. This link is to my “channel” at themaven, I put up several posts over the weekend to get things started. I hope you can check it all out.
Hiking in Sedona
The trail to Devil’s Bridge