Thursday, November 18, 2010

NASDAQ Leads The Way Higher

Just yesterday I wrote about how we should now be looking to get long stocks as the bull market should continue.  Well today the stock market gapped open sharply higher and never looked back. Obviously I wasn't expecting to see such a powerful open but then again I am not surprised to see buying enter the market as this is the time of year for bullish events to take place and rally stock prices.

In the lower panel is a ratio line of the NASDAQ vs. the S&P and as you can see this ratio line has been trending higher. A higher moving ratio line means the NASDAQ is outperforming the S&P. Clearly you want to be long the NASDAQ rather than the Dow, S&P or Russell2000. The NASDAQ has been leading the way higher since early September and in my opinion should continue to act as a leader into the new year.


Anonymous said...

While you certainly make a valid point in relation to the Nasdaq outperforming the other indexes, I think it's better to narrow the focus even further, down to the actual sectors, to see which sector has been outperforming throughout the rally - you know, real estate, banks, energy, miners, tech, whatever. There's probably a more pronounced leadership role at the sector level than there is at the index level.

Kevin said...

You are absolutely correct. We could even narrow it down to individual stocks to see whch stocks have been the strongest within the strongest sectors. I was just keeping it simple and general when I said the NASDAQ is where the strength is in relation to the other major indices.

Anonymous said...

Where do I go for ratio line comparisons?


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