Traders,

Let’s talk about market capitalization. It’s Wall Street’s preferred metric for measuring the size of a company. Here’s the formula for calculating it.

Market cap = share price x shares outstanding.

Take Apple, the king of all companies in the universe. Its share price is $161 this morning, and it has 15,821,946,000 shares outstanding. Multiply them together, and you get a market cap of 2,547,333,306,000. That’s $2.5 trillion for short.

Market caps rise as the share price climbs, but because stock split increases the share count, the size of a company is not just a matter of being the most expensive stock. At $161, Apple is hardly the most expensive stock, yet because its outstanding shares have ballooned to nearly 16 billion, it carries the largest market cap of all.  

There are various categories we place companies in depending on their market caps. Here are the three most common:

Small Cap: < $2 billion

Mid Cap: $2 billion to $10 billion

Large Cap: > $10 billion

Check out yesterday’s Tales of a Technician blog for more on market capitalization and how you might use it.

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Frank’s Charts

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Chart of the Day: Bitcoin (/BTC)

The trend in Bitcoin started a new leg this week with Monday’s breakout over $29k. BITO is following suit.

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