Use this tool to follow the SOX
PowerRatings
members, you are able to create your own watch lists (or portfolios) using the
My PowerRatings Portfolio feature. This enables you to track a large, or
small, universe of stocks that you already own or are considering buying or
selling.
It also allows you to concentrate on a specific sector of the market at a glance
and determine whether it is in good or bad shape. Let’s use Semiconductor stocks
as an example. The PHLX Semiconductor Index (SOX)
is viewed as a very important market indicator. The SOX generally leads the
Nasdaq and the Nasdaq generally leads the broader market, therefore a lot of
people follow the SOX very closely. Because the SOX doesn’t actually trade
(except for options) you can’t check its
PowerRating,
but you can track the performance of its components.
The SOX has 19 components and as you can see from the table below, only
Broadcom (BRCM) has a
PowerRating
of 7 or higher. The other 18 components all have
PowerRatings
between 4 and 6, suggesting performance roughly in line with the S&P 500.
| Symbol | PowerRating | Symbol | PowerRating |
| ALTR | 5 | MU | 6 |
| AMAT | 5 | MXIM | 4 |
| AMD | 6 | NSM | 5 |
| BRCM | 7 | NVLS | 5 |
| FSL | 6 | STM | 5 |
| IFX | 6 | TER | 5 |
| INTC | 5 | TSM | 5 |
| KLAC | 4 | TXN | 4 |
| LLTC | 4 | XLNX | 4 |
| MRVL | 5 |
One thing that must be considered before drawing
any conclusions about the SOX is index weightings.
The top seven components (MRVL, KLAC, LLTC, MXIM, TXN, BRCM, FSL) account for
more than 54% of the index (as of 06/07/06).
This information can be used in a number of ways. The list could be used as an
indicator for the SOX, and in turn a lead indicator for the Nasdaq. Or you could
build your own synthetic ETF to replicate the performance of the SOX. Better
still you could construct a version daily based on
PowerRatings
rather than index weightings, constantly adjusting your position to be more
heavily weighted in the stocks most likely to outperform the S&P 500.
You can
attend a free
class on how to use
PowerRatings,
presented by Steve Primo, TradingMarkets Director of Education.
Click here
to take a free trial of