Let's call it the Google bounce. S&P tracking funds have to buy GOOG, which is why it is soaring as speculative hedge funds try to buy it and turn it around for quick profit. However, you can see that SPX/ES is lagging, because these very same funds have to make up an extra 70 billion to pay for that stock, as the outgoing Burlington has only a 30 billion cap (GOOG is at 100 B). In other words, they are selling other SPX stocks to get ready to pay for GOOG. The fundamentals have not changed for GOOG, so don't get married to those gains.
This entry was posted
on Wednesday, March 29, 2006 at 1:11 PM.
