In my previous post, I have mentioned a few useful tools to understand and visualize the stock market (I am talking exclusively US stock markets here). One of the tools that I use a lot is finviz. I find the S&P500 heatmap there most useful and a quick market barometer.
Market maps represent a popular form of visualization that allows browsing, searching and analyzing large amounts of stock data
A market heatmap, like the one shown above, is a powerful data visualization tool that provides a visual representation of data values in a matrix. Let鈥檚 break down its structure and explore its usefulness:
Heatmaps use colors to represent the magnitude of a variable. Each cell in the matrix corresponds to a specific data point, and the color intensity indicates the value of that point. For example, warmer colors (like red) represent higher down stocks, while cooler colors (like green) indicate stocks that are up in value.
The X and Y axes of the heatmap correspond to different dimensions or categories. For financial markets, these could be time intervals (e.g., days, hours) on one axis and asset classes (e.g., stocks, currencies, commodities) on the other. In the case above, it is 1-day price change expressed in % of all the components of S&P500 index.
Each cell in the heatmap represents a specific combination of the X and Y axes. The color of the cell reflects a relevant metric, such as price changes, trading volume, or liquidity. In this case each cell represent an individual stock.
Size of each cell is proportional to the marketcap, therefore area of the cell is proportional to its relative contribution in the S&P 500 index. The stock are also grouped together in terms of sectors. The size of sector, is a a box consists of a number of individual stocks, is therefore proportional to the relative weight of that sector in the S&P500 index.
This last point is very important. Since over a long period of time, certain sector goes in and out of favor. They gain or lose their relative weight in the S&P500 index. Currently the technology section, upper left box that I highlighted in yellow is a overwhelming component of the index; while energy sector, lower right is a relatively small component of the index. For example, when I started in the Energy industry in mid-2000s, that sector used to represent nearly 15% of the S&P500 index! We have contracted significantly.
Information Technology (Tech): The tech sector carries a significant weight in the index. Companies like Apple, Microsoft, and Alphabet (Google) contribute to this sector. Its weight is approximately 26.37%
Financials: The financial sector includes banks, insurance companies, and other financial institutions. It accounts for about 17.07%
Healthcare: Healthcare companies, including pharmaceuticals, biotechnology, and healthcare services, make up around 13.93% \
Consumer Discretionary: This sector covers consumer goods and services that are non-essential. Think retail, entertainment, and leisure. Its weight is approximately 9.97%
On the other hand, the least-weighted sectors in the S&P 500 are:
Energy: The energy sector, which includes oil and gas companies, has a relatively low weight of about 2.91%
Utilities: Utilities, such as electric and water companies, account for only about 2.75%
Real Estate: Real estate companies, including real estate investment trusts (REITs), have a combined weight of just 3.00%
The Bubble Map here is another nice way to see the sectors and their 1-day performance. The size of the bubble is proportional to their Market Capitalization. If you want to see how big individual companies are, there is a better way to display it. I will just change Y-axis to Market Cap!
So the Y-Axis scale is now in Trillions of dollars. Anyone want to guess what are the 3 big bubbles, each north of 3T dollars in market cap? Yeah, not hard
and if you add the two Alphabets; GOOG and GOOGL, both 2T each, so they are 4T!
Yep, of the 50T dollars marketcap of S&P 500, those 3 companies are about 10T! I sure hope you own these 4 stocks. I do!
Well there is a saying out there that Economy and Stock market is different. It is true. Lot of the stock market wealth that is created over the last 16 years of bull market is not really reflected in the economy. Middle class is shriking, and people who are doing blue collar jobs are earning less every day. In fact, most of the job growth or retention is happening in the low wage jobs.
To test that, I made the Y-axis as number of employees! Do you see who comes to the top? Yep, WMT and AMZN. All those Walmart and Amazon jobs pay near minimum wage. And that ladies and gentleman is the story of middle America!
Oh the ACN bubble with 733K employees! That is Americas back office, about 90% of those jobs are H1B employees, mostly from India.
Hope you like the displays.
