Best of the Week
Most Popular
1. Next Financial Crisis Is Already Here! John Lewis 99% Profits CRASH - Retail Sector Collapse - Nadeem_Walayat
2.Why Is Apple Giving This Tiny Stock A $900 Million Opportunity? - James Burgess
3.Gold Price Trend Analysis - - Nadeem_Walayatt
4.The Beginning of the End of the Dollar - Richard_Mills
5.Stock Market Trend Forecast Update - - Nadeem_Walayat
6.Hindenburg Omen & Consumer Confidence: More Signs of Stock Market Trouble in 2019 - Troy_Bombardia
7.Precious Metals Sector: It’s 2013 All Over Again - P_Radomski_CFA
8.Central Banks Have Gone Rogue, Putting Us All at Risk - Ellen_Brown
9.Gold Stocks Forced Capitulation - Zeal_LLC
10.The Post Bubble Market Contraction Thesis Receives Validation - Plunger
Last 7 days
Stock Market Detailed Map Of Expected Price Movement Before The Breakout - 18th Oct 18
Determining the Outlook for Gold Mining Stock - 18th Oct 18
Investor Alert: Is the Trump Agenda in Peril? - 18th Oct 18
Stock Market is Making a Sharp Rally After a Sharp Drop. What’s Next? - 18th Oct 18
Global Warming (Assuming You Believe In It) Does Not Affect Gold - 18th Oct 18
Best Waterproof Compact Camera Olympus Tough TG-5 Review - Unboxing - 18th Oct 18
Silver's Time Is Coming - 17th Oct 18
Stock Market Volatility Breeds Contempt - 17th Oct 18
Gold 7-Year Bear Market Phase Is Over - 17th Oct 18
Gold - A Golden Escape - 17th Oct 18
Tec Stocks Sector Set For A Rebound? - 16th Oct 18
Real Estate Transactions are Becoming Seamless with Blockchain-Powered Data Sets - 16th Oct 18
Important Elements of a Viral Landing Page - 16th Oct 18
Stephen Leeb Predicts 3-Digit Silver and 5 Digit Gold?! - 16th Oct 18
BREXIT, Italy’s Deficit, The EU Summit And Fomcs Minutes In Focus - 16th Oct 18
Is this the Start of a Bear Market for Stocks? - 16th Oct 18
Chinese Economic Prospects Amid US Trade Wars - 16th Oct 18
2019’s Hottest Commodity Is About To Explode - 15th Oct 18
Keep A Proper Perspective About Stock Market Recent Move - 15th Oct 18
Is the Stocks Bull Dead? - 15th Oct 18
Stock Market Bottoms are a Process - 15th Oct 18
Fed is Doing More Than Just Raising Rates - 14th Oct 18
Stock Markets Last Cheap Sector - Gold - 14th Oct 18
Next Points for Crude Oil Bears - 13th Oct 18
Stock Market Crash: Time to Buy Stocks? - 12th Oct 18
Sheffield Best Secondary School Clusters for 2018-19 Place Applications - 12th Oct 18
Trump’s Tariffs Echo US Trade Policy That Led to the Great Depression - 12th Oct 18
US Dollar Engulfing Bearish Pattern Warns Of Dollar Weakness - 12th Oct 18
Stock Market Storm Crash, Dow Plunges to Trend Forecast! - 12th Oct 18

Market Oracle FREE Newsletter

Trading Any Market

What the NASDAQ’s Recent Underperformance Means for Stocks

Stock-Markets / Tech Stocks Aug 01, 2018 - 04:31 PM GMT

By: Troy_Bombardia

Stock-Markets

Tech stocks had been leading the overall stock market this year (i.e. FANG). However, the NASDAQ’s good fortune has reversed recently, with the NASDAQ now below its 50 daily moving average.


The NASDAQ has now fallen 1%+ 3 days in a row. What’s surprising is that while the NASDAQ has fallen 1%+ 3 days in a row, the S&P 500 hasn’t fallen 1%+ on any of these days. In other words, the NASDAQ has significantly underperformed the S&P 500.

 

Here’s what happens next when the NASDAQ falls 1%+ 3 days in a row while the S&P doesn’t fall 1%+ on any of these days.

As you can see, the NASDAQ tends to make a short term bounce in the next 1-2 weeks. What happens after that is a 50-50 bet.

As you can see, the S&P tends to make a short term bounce in the next 1-2 weeks. What happens after that is a 50-50 bet.

But here’s the really interesting study. What happens next to the NASDAQ:S&P ratio when this signal gets triggered.

  1. A rising ratio means that the NASDAQ will outperform the S&P.
  2. A falling ratio means that the NASDAQ will underperform the S&P.

As you can see, the NASDAQ tends to outperform during the short term while it makes a short term bounce, but it tends to underperform in the medium-long term.

This suggests that for the remainder of this bull market, the NASDAQ and FANG stocks will not significantly outperform the S&P 500.

Conclusion

Last week we published a study which demonstrated that the stock market leaned bearish in the short term. With the stock market having already made a pullback, it looks like the stock market’s short term downside is limited.

This study doesn’t tell you if the market will go up or down in the medium-long term. But it does suggest that the NASDAQ will not significantly outperform the S&P 500 like it did over the past year.

Click here for more market studies

By Troy Bombardia

BullMarkets.co

I’m Troy Bombardia, the author behind BullMarkets.co. I used to run a hedge fund, but closed it due to a major health scare. I am now enjoying life and simply investing/trading my own account. I focus on long term performance and ignore short term performance.

Copyright 2018 © Troy Bombardia - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules