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Dow / Nasdaq Divergence

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The Nasdaq continues to outperform the Dow Jones Industrial Average. Over the last 30 days, the NDX is up 6% while the Dow is down 4%. But yesterday the divergence reached an historic point. Intraday, the Dow posted a new 30 day low and the NDX posted a new 30 day high. I mentioned this in the Buzz yesterday but here it is again.

Since the beginning of 1995, there's been just one quarter that exhibited this type of behavior: the first quarter of 2000. The date of first occurrence was 1/24/00 and the most recent occurrence was 3/7/00. See the chart below. If 2000 is any indication, the divergence may not end right away (spreaders beware). However, the warning signs are there. In 2000, the internets were hot and financials were not! Sound familiar? Look familiar?

No positions in stocks mentioned.

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