Why the Dow is Different From S&P500 & NASDAQ

Posted Mar 24, 2020 by Martin Armstrong

QUESTION: Hello,
I have been following you for several years and being retired your emails along with my coffee are a great way to start the day. I want to stay limber and laser focused on one index. I chose the S&P because of the volume; both ETF and options.
I know a rising tide lifts all boats; but you seem to be all about the DOW. Of the two (or three IWM); any comments about which one(s) are more for trading than investing?
Thank you again
CS

ANSWER: Socrates covers over 1,000 markets daily. The Dow is a reflection of the big money and international capital flows. The S&P500 is more domestic oriented used among institutions and fund managers, where the NASDAQ has more of a tendency to be retail. On the rally up from 2009, the Dow led. Note that the peak here in 2020, the Dow peaked first, then the S&P500 and NASDAQ made new highs into February taking the lead from the Dow. That was the kiss of death and confirmation a sharp correction was then possible.

We could set the stage for a strong rally after February

US Share Market for Next Week Oct 13, 2014

Posted on October 11, 2014 by Martin Armstrong

Reply

We have elected a Weekly sell signal in the Dow and this is warning that we may yet see that November low during the week of November 3rd. The critical support now lies at 15961 and a weekly closing beneath this area will warn of a sharp correction that will make people’s nose bleed. Nevertheless, our models show next week as a turning point with Directional Changes back-to-back for the next 2 weeks and high volatility for the week of 11/03. Critical support also lies at 15555/ Only a monthly closing below this area would warn of a sustained correction.

When we look at the cash S&P 500, the market is stronger than the Dow reflecting the shift is still in place for the broader market leading. Our energy models are still bullish for the broad-term. Here we do see support lies at 1814 and 1766. We would need to see a monthly closing below 1814 to signal a sustained correction is possible. Where the Dow tends to target November, the S&P 500 targets December for a turning point with high volatility in November. The weekly turning points still show choppiness 10/13, 10/27, and 11/10. Key days next week will be Monday and Friday. This is the same targets in the Dow on a daily level.

In the NASDAQ composite we see 10/13, 10/15, and 10/17 as daily targets with Wed showing high volatility. Here the key weekly targets are 10/13 and 10/27 followed by 11/10. Key support beings at 4239 and 4207. A monthly closing BELOW 4020 will signal a sustained correction. Keep in mind that November will be 72 months from the 2008 low in the NASDAQ. A low at that time on our long-range volatility models would imply we could set the stage for a strong rally after February.

Nasdaq- capability of reaching 6500,00

DEFLATION and yet another reason to Buy Equities

Posted on August 22, 2014 by Martin Armstrong

Reply

With the Sovereign Debt Crisis, Bail-Ins, Cycle of War, Global Contraction if Capital Flows & Investment, welcome the age of DEFLATION and yet another reason to BUY equities. The NASDAQ Composite is up 50.9% from the 2007 high as of the close of July. This index still has the capability of reaching 6500,00 level compared to the 2000 high of 5132,52.The S&P500 is up only 22.49% for the same period while the Dow Jones Industrials is up 15.9%,
There is no question, where do you put your money? If you cannot trust banks, bonds are risky, cash is being eliminated, FATCA is reducing investing overseas, just ask yourself – what is left? Capital is being driven into equities and the retail public is still not in like it was, liquidity remains low, the talking heads keep saying this is a bubble so sell and buy exactly what? Then the Fed along with the Bank of England are contemplating rate hikes of quarter point changing the trend in interest rates. The central banks will recognize that Europe is caught in the Euro vortex of disintegration and will depart from their policies and pay attention to the asset booms domestically.
There will just be no place to stuff serious money BUT equities and corporate bonds. It becomes a process of elimination.