VTS Community,

A couple weeks ago on July 13th I drew attention to the fact that all of the gains the S&P 500 has seen in 2018 so far are due to just 6 large companies.  If you missed it here’s the article.  The chart I showed was the following:

 

 

Percentage contribution to S&P 500 performance in 2018:

Amazon:  36%
Microsoft:  18%
Apple:  15%
Netflix:  15%
Facebook:  8%
Google:  7%
Total:  99%

 

Market breadth is clearly weak right now and when we add the fact that bonds are down, precious metals are down, real estate is down, MLP’s are down, this is not a strong market from very many angles.  The natural question people have been asking is:

What happens if the technology sector starts to decline?

Well in the last 3 days we’ve gotten a glimpse of the answer.  Here is the XLK technology ETF this year:

 

Down 4.7% in the last 3 days and it’s taken the S&P 500 down a little with it.

 

For a minute there it was looking like we had a date with the all time high set back in January.  However thanks to the recent technology sector decline, led by Facebook’s spectacular -21% crash we’ve taken a small break from seeing that.

If tech companies can hold up a weak market, then it just stands to reason that they can also take it down.  Something to pay attention to.  We’ll see how things go with Apple earnings today but a few of the indicators I track are getting awful close to flashing warning signs so those safety positions really aren’t very far off right now.  Stay tuned…

 

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