By InTheMoneyStocks on June 27th, 2010 3:03pm Eastern Time
The S&P 500 Index is truly the pulse of the stock market . This index consists of 500 major stocks that are market cap weighted. It is important to remember that most people in the public watch the Dow Jones Industrial Average (INDEXDJX:.DJI). The DJIA represents just 30 blue chip stocks that are price cap weighted. While the DJIA should still be followed it is important to realize that just one high priced stock will effect the index much more than a low priced stock. Therefore, a stock such as International Business Machines Corp. (NYSE:IBM) is more important than General Electric Company (NYSE:GE), despite the fact that the market capitalization of both companies is very similar. Therefore, the S&P 500 will give a more broad and accurate picture of the market.
This past week the S&P 500 Index lost 42.00 points for the week as the options expiration prop job came to an end. It is very important to note that the S&P 500 Index is still above the May 25th pivot low and that should be respected. As long as the index holds above that critical level it could still bounce around. This market downturn is now nine weeks in length and has been the sharpest of the corrections since the March 2009 low. The weekly support level is 1040.00 at this time. Next week will be interesting to see if the market can bounce back ahead of a major holiday in the U.S. on July 4th. This weekend was also the G20 meeting in Toronto, Canada where the different nations will speak about their economic concerns. Prior meetings of this type have coincided with short term bounces afterward.
Traders and investors can utilize the SPDR S&P 500 ETF (NYSE:SPY) as an alternative means of tracking the S&P Index.
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