US Sector Update: Friday, October 26, 2012

The shining star that could never stump its toe, stumped its toe.  We're speaking of Apple, which makes up approximately 4% of the S&P 500 and 20% of the market weighted Technology sector, hit a high of around $700 a share about a month ago, and now has dropped close to $600.  Of course, you have to recognize that this is still up substantially from the low $400s that it traded at as 2012 kicked off.
But from a short-term aspect, this is taking some of that hot air our of the market.  That is the nature of bull markets as optimism turns into euphoria, and then reverts back to a more normal and healthy state.  As you review the Technology sector (in the relative strength sector charts below), you can see that this area of the market has been in a very volatile yo-yo configuration (and really for much of the last 3 years when you take a look at this on a longer timeline), and now it is at the low point of the recent mood changes.
Don Hays, Nicholas Warf & Justin Wood
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