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June 19, 2006
Nasdaq is leading this nervous market, Mon., 6/19/2006 5:24 PM
The Nasdaq Composite (blue) and Dow 30 (black) indexes have been tracking closely in the past five days. But I noticed that at the close Wednesday through the close on Friday it was the Nasdaq that was leading the market rally. Today, the higher beta Nasdaq led the U.S. equity market south.
I didn't write much today because I pretty much said it all on Sunday -- when I said that the rally last week was a Dead Cat Bounce and that the Bear has won, etc.
The arrow on the chart represents Sunday, by the way.
Posted by Posted by Bill Cara on June 19, 2006 05:24:16 PM | Category: Cara Today in the Market
I've seen charts showing this before a few times, I believe that someone called this the "Dominant Market Theory" or something similar. I actually have a chart in a few timeframes that I monitor that takes the result when dividing one by the other and then plots two EMAs of this (I have it set to 21 and 50 EMAs). Its a bit more complicated but does the same thing. I have found in most cases when the market is going down that the cross signifies at least a temporary pause and visa / versa.
Mike
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June 19, 2006 6:28 PM [link]