Since the NDX has had a bit of a hissy fit and has stumbled out of bed I thought i would take at a few of the structural elements that might be making things a little bit bumpy for tech related issues. On a casual viewing it seems as if the new disruptors are the ones that are struggling a little bit and are weighing on the index. The chart below compares the relative performance of Apple, Cisco Systems, Oracle, Microsoft, Google, Facebook, LinkedIn and Twitter.
As you can see it is the new arrivals that are struggling – not the old established names. Its strange how actually having a business can help you in tough times.
I thought I would take a look at how the new listings for the year were faring since the health of stocks post IPO can tell you a bit about market internals.. The list below is all those issues that hit the boards this year.
The chart below tracks the relative performance of these issues.
All of them have taken a bit of smack over the past month. However, this raises the question as to what does this information convey to us. Information is only useful to a trader if it adds to the fidelity of their decision making and it in no way overwhelms the trading process. I find information like this interesting but not critical to the investment process since the basis of the the trading decision is what is happening at a macro level – this is very much micro level narrative. It tells me a small level story but that is about all. The overall trend is what matters and in terms of the NASDAQ I think we are a long way from the days of Pets.com which went listing to liquidation in 268 days.