Many times I notice the sector index (OSX, SOX) move rather generously but yet the stocks either move VERY little or don't move at all. Given the index is comprised of those very stocks...how is this possible? Thank you. -Dave
in case anyone also had this question..here's what phlx said: David, You can right your PH.D thesis on that question. Here is an Microsoft Excel file which shows the calculations for each index that trades on the Philadelphia Stock Exchange. If you have any questions, feel free to give me a call. Scott Morrison Philadelphia Stock Exchange, Inc. (PHLX) 215-496-5167 what an answer! 2 things worry me. WRITE not RIGHT...and he didn't even attach the Excel file. :-/ anyone interested in writing that thesis for me, maybe I'll get an answer. LOL
that is just your perception. If every stock in the Dow 30 closed up exactly 1 point, that would be a huge up day for the index.
I would think your perception is incorrect, as the indexes do indeed change relative to the moves in specific stocks. You can set up a spreadsheet with the underlying stocks (in the correct percentages of course), use the index's divisor, and you will see that they are responsible for the indexes value. I don't know what happens if a stock in the index is halted, as i know the index continues to change while a component is halted, and you can still trade options on that index. Whether they just inflate the price of the options OR approximate a value for that component of index i don't know.
That's what made me notice the inconsistency. I don't have charts at all, only spreadsheets. However you're saying with the calculations used to derive the value of the OSX...it IS possible for the OSX to set a new high w/o any of the components setting a new high? In fact one time today the OSX hit a new high while all the stocks down-ticked. Both myself and a friend at another firm noted this. That's the reason for the question. It's easy to say it's impossible. You will also notice that on a handful of days a year the sector index will do over 100 percent of it's 5 day average range (value I use daily) 1 minute into the trading of the index...and the stocks barely move 10 cents each if that. It's oddities like these that made me wonder exactly why such things happen. But if it's impossible, then nevermind.