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Dear Dennis,
The Dow and Nasdaq divergence is not the same as the Dow S&P divergence.When
the Dow goes up or down the S&P generally follows.Not so with the Nasdaq.The
S&P rarely follows the Nasdaq alone.
There are only 30 stocks in the Dow and to make it reflect the "new economy"
would mean more than just token Dow additions.
Sincerely,
John
>From: Dennis Holverstott <dennis@xxxxxxxxxx>
>Reply-To: dennis@xxxxxxxxxx
>To: <realtraders@xxxxxxxxxxxxxxx>
>Subject: [RT] Re: Out On A Limb
>Date: Sat, 26 Feb 2000 09:58:29 -0800
>
> > Everyone speaks about the Dow / Nasdaq divergence but the true
>divergence
> > has been the S&P / Dow divergence.
>
>Same divergence. Many of the biggest stocks in the S&P trade on Nasdaq.
>So, if the Dow goes down and the NDX goes up, the S&P will be somewhere
>in between.
>
> > There was a time when one S&P point equalled 6 to 8 Dow points. That >
>will return and you will know the situation is normalized.
>
>Not really. They will just change the stocks in the Dow to "normalize"
>things. They already added MSFT and INTC to the chagrin of some NYSE
>members and they are talking about doing some more of that because the
>Dow isn't an "accurate reflection" of the economy.
>
>This tech thing may be a bubble or it may really be a fundamental
>change. Art Cashin on CNBC compared it to the railroad stocks in the
>1800s. They went from being insignificant to dominating the market and
>it lasted for many years.
>
>--
> Dennis
>
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