The market's are being influenced by a single stock. How? Well there are linkages and arbitrage opportunities between the big Indices --> SPY, DIA, QQQ What does this mean? This means that if you can make the Dow go up, you can make the S&P go up. If you can make the S&P go up, you can make the Q's go up and vice versa. Can you give me an example? Sure, the fact that there are high frequency shops that capitalize on this is enough for me, but I'll do better; How about the fact that you never see a day where the S&P is up 1% and the QQQ or Dow is down 1%?
Next: Structure of how the Dow is priced. It's different than the S&P and QQQ, these are both market-cap weighted. DIA is Price weighted. Boeing is a monstrosity inside of the Dow. It's a $425 stock. The next biggest is UNH @$267, MMM @$209, GS @$196
It's all about Boeing. Why Boeing? (I have to give credit to DataTrek for coming up with this research and all of the tremendous data they come out with:) - Boeing is up 31% YTD and 45% from it's lows. It's low in December was 58 days ago. 45% in 58 Days - Boeing is 11% of the Dow - Boeing is 2.4x more influential than AAPL and 3.9x that of MSFT, AMZN and GOOG aren't even close > Point: Move Boeing and you can move the entire marketplace - Boeing's 10.9% weight has contributed 776 points to the Dow in 2019 - That contribution is more than the next 4 names combined - GS (225 points), IBM (177 points), UTX (157 points), HD (133 points) = 692 points - These 5 names are responsible for 56% of the Dow's gains YTD. > Point: Boeing is directly responsible for 30% of the Dow's gains YTD. > Bigger Point: BA is the most influential stock in the marketplace. If you can move the Dow you can move the S&P's.
SPY is up 8% YTD. It's up 19.11% from it's low on Dec 24th @ $234.34 + $44.8 (in 58 days) Why does this concern me? Well there's net outflows in the SPY YTD. I think smart money is potentially selling into this move and covering it up by driving order flow into one stock. ETF Fund Flows; etf.com/etfanalytics/etf-fund-flows-tool
My max upside on Boeing is $454.
Have a wonderful weekend everyone and best of luck to ya next week gentlemen - RH
fall in BA - slight divergence in dow. Shorted BA @ 430, 435 and above 440 3 puts. A technical short- I don't feel comfortable for profiting from a real tragedy.
don you are the man. big fan of your work. thank you for giving retail actionable content. will suggest you advise your clients spreading risk via correlated assets. Russell (3) to sp500 (2), just my opinion though. keep up the great work
the_no_factor
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Thanks Don, almost sure it’s you :). Or someone at Theo. Currently subscribed and love your content.