Stock Market Leadership Narrows

 10/31/2025

 

Stock Leadership Narrows

 

Oct 31 2025 6:30 AM,CST

There was no lack of news in the tech sector this week. Thursday META formerly Facebook, fell 11%. Investors were apparently concerned about continued plans to invest in Artificial Intelligence. There have been fortunes sent to the Church of AI but results have been somewhat lacking.

Nvidia NVDA became the first $5 trillion market capitalization stock ever.  The stock reached its first one trillion mark in early 2024. The move from two to three T took a mere 66 days.  The move from four to five T required a mere 748 days. Piling into fewer stocks in a frothy market is typically a sign of a top. This happened in 1966 when the focus was on a group of stocks known as the Nifty Fifty. IBM, Digital Equipment, and Wang were a few of the tech darlings back then. Where are DEC and Wang today?

Apple’s quarterly revenue is up8% from a year ago. After a long pause in growth, Apple has had two quarters of revenue increase compared with the same period last year.

Back to the narrowing of leadership in the stock market. The S & p index is weighted according to market capitalization. Apple with its near $4 T market cap carries more weight than say Ford. Ford is worth a measly $48 billion, how times have changed.  The Magnificent Seven tech stocks account for a full one-third of the entire SPX value.

Last Tuesday there were 294 more stocks down than up. Since 21023 the weighted SPX is up 80%. The equal weight SPXEW trails at  a 30% gain. British Economist John Maynard Keynes remarked that picking stocks is rather like picking the winner of a beauty contest. The object is not to pick which girl you think is the winner but to pick the one the rest of the crowd believes to be the winner. That is the case for this tech heavy rally of the last years.

Last week we reported on the big jump in oil prices. West Texas Crude rose from $56.50 to just over $62 in less than a week. Price is now consolidating above the $60 level.  Watch Apache APA for a clue regarding the next break out. APA rose from $22 to  $24.75. It now has fallen back to $22.40. /A move over $23.75 would be an indication of a renewed rally.