The AAPL Effect

One of the things traders are constantly monitoring is internals of an index or market, for clues about the strength or weakness of that market beyond what the simple headline numbers say.

That is why investors and trader monitor which sectors are rising and falling, because it can give insight into the “health” of a market rally.

For instance, if you have a market rallying but defensive sectors like utilities or consumer staples are leading the rally, that’s not a good thing.  The reason is because those defensive sectors outperform when the economy isn’t growing or people aren’t confident about the direction of a market (they are both economically insensitive—people need electricity and basic consumer goods like razors regardless of whether the economy is growing or expanding) . . .

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