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April 27, 2006
Nasdaq Underperforming the NY Composite
The Nasdaq continues to underperform the NYSE Composite and this is not a pretty picture. The market overall just does better when the Nasdaq and techs lead. Right now the Nasdaq and techs are lagging the NYSE Composite. I use the NYSE Composite for a comparison because there is no overlap. Stocks are either part of the NYSE, Nasdaq or Amex. The bottom chart shows the Nasdaq/NY Comp ratio or the price relative. The Nasdaq is outperforming when the price relative rises and underperforming when it falls. Notice that the price relative broke a rising trendline in late 2003 and the Nasdaq peaked in early 2004. The Nasdaq underperformed until 2005 (gray box) and price relative broke trendline resistance in July 2004 (green line). This outperformance did not last though and the price relative broke support over the last two months (gray oval). This is not a good sign of techs or the market overall.
Posted by Arthur B. Hill at April 27, 2006 12:07 PM