Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
Stock Market Due for 9-10% Pull Back? - 25th April 19
Dow Transportation Stocks Sector Is Testing Resistance - 25th April 19
INSOMNIA i64 UK Best Games Festival Vlog of What it's Like to Attend - 2019 - 25th April 19
In Just 45 Mins., Learn to Spot New Opportunities in ANY Market for FREE! - 25th April 19
If This Pattern Holds True, the US Economy Could Face the Worst Stagnation in History - 25th April 19
8 Reasons Why Investment in Education Always Pays Off - 25th April 19
Want To Earn A Safe 5% In Fixed Income? Buy Preferred Stocks - 24th April 19
Can Gold Price Rise Without a Rate Cut?  - 24th April 19
Silver’s Next Big Move - 24th April 19
How Can a College Student Invest Wisely? - 24th April 19
Prepare For Unknown Stock Market Price Action As New Highs Are Reached - 23rd April 19
Silver Plays a Small but Vital Role in Every Portfolio - 23rd April 19
Forecasting 2020s : Two Recessions, Higher Taxes, and Japan-Like Flat Markets - 23rd April 19
Gold and Silver Give Traders Another Buying Opportunity - 23rd April 19
Stock Market Pause Should Extend - 21st April 19
Why Gold Has Been the Second Best Asset Class for the Last 20 Years - 21st April 19
Could Taxing the Rich Solve Income Inequality? - 21st April 19
Stock Market Euphoria Stunts Gold - 20th April 19
Is Political Partisanship Killing America? - 20th April 19
Trump - They Were All Lying - 20th April 19
The Global Economy Looks Disturbingly Like Japan Before Its “Lost Decade” - 19th April 19
Growing Bird of Paradise Strelitzia Plants, Pruning and Flower Guide Over 4 Years - 19th April 19
S&P 500’s Downward Reversal or Just Profit-Taking Action? - 18th April 19
US Stock Markets Setting Up For Increased Volatility - 18th April 19
Intel Corporation (INTC) Bullish Structure Favors More Upside - 18th April 19
Low New Zealand Inflation Rate Increases Chance of a Rate Cut - 18th April 19

Market Oracle FREE Newsletter

Top 10 AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

What the NASDAQ’s Recent Underperformance Means for Stocks

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

By: Troy_Bombardia


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.


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

I’m Troy Bombardia, the author behind 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.

© 2005-2019 - 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