The Trillion Dollar Club
The Bull Market of 2019 roars on, although looking a bit ragged lately. Some indexes, such as the Nasdaq 100, have gone on to make NEW ALL TIME HIGHS. Others, such as the Dow Industrials are just below new highs. At the other end, the Russell 2000 remains nearly 10% below ITS all time highs.
The Nasdaq 100, in particular, has benefitted from the resurrection of the “Four Horsemen”, the mega capitalization technology monopolies. “Four Horsemen Pull Markets To New Highs”. (https://markonomics101.com/2019/03/21/four-horsemen-pull-markets-to-new-highs/).
Comprised of Apple, Amazon, Alphabet (Google), and Microsoft, each of the “Four Horsemen” is approaching a new milestone: A Trillion Dollar market capitalization! True enough, Apple and Amazon BRIEFLY touched the magic Trillion mark, but now all 4 appear headed for rarified territory.
So Go The Horsemen…..
So goes the stock market. With the value of the 4 now approaching $3.9 Trillion, nearly 15% of the entire Wilshire 5000, the health of the market and the Horsemen go hand in hand.
For Bulls, the good news is this elite quartet are solidly in very sharp, but well defined Uptrends. The Slide Show below has annotated charts of the Horsemen. A few key takeaways are as follows:
- Microsoft has become the most valuable company with a market cap just below $1 Trillion. It was the first to make NEW ALL TIME HIGHS at $115. MSFT reported earnings last week causing the stock to leap ABOVE its trend channel. This may be a sign of exhaustion.
- Amazon and Alphabet (GOOGL) are within a few percent of their highs. Both are within Uptrend Channels. Amazon will be valued at $1 Trillion if the stock, currently near $1,950, crosses $2,000. Alphabet will need to advance to $1,450 to be worth a Trillion.
- Apple has made an amazing recovery, and it too, is in a nice Uptrend Channel. Last summer, at its high of $230 per share, Apple briefly reached a market value of $1.1 Trillion.
With each Horsemen in a very healthy Uptrend, the likelihood remains high that the stock market will continue upward. It is inconceivable that the market can either RALLY or DECLINE without the leadership, or at least participation, of the Horsemen.
While all of these issues are approaching Trillion dollar market caps, only 1 other company, Facebook, is worth in excess of $500 million. And, just barely at $540 Million. These companies DOMINATE sentiment and investor cash flows. No analysis of the market is complete without considering them.
Is The Bull Market Getting Too Old?
Stocks are not cheap by any measure. Nonetheless, for the time being, the primary direction continues to be higher. It pays to keep a close eye on the Four Horsemen, now the Trillion Dollar Club, for clues as to the market’s future direction. When these companies violate their Uptrend Channels, that will be a clear sign the rally may be running out of steam.
Be Informed, Not Misled!