[RT] DOW leading Nasdaq

["Dan Harels" <harelsdb@xxxxxxxxxxx>]

I would like to make the proposition that the DOW Industrials and the Nasdaq 
are tracing the same pattern except the DOW is leading the Nasdaq by a few 
weeks.  The DOW underwent a sharp correction which was followed by a sharp 
recovery.  The DOW's momentum is ebbing away and it appears that it will 
make a lower high.  The Nasdaq has made a sharp correction and now appears 
to be making a sharp recovery.  Today's recovery was strong, however it is a 
long way back to 5000 and a lower high appears to be in the cards to me.

Although Charles DOW used the Industrials and the Transports to formulate 
his DOW Theory, any two indexes holding stocks with significantly different 
characteristics can be used to apply the theory.  Presumably the DOW and 
Nasdaq are significantly different because one reflects the "old economy" 
while the other reflects the "new economy".  It makes sense that the DOW 
should lead the Nasdaq down since it includes a higher proportion of 
interest rate sensitive stocks.  The effects of rising interest rates should 
be seen in the DOW first.

According to the DOW theory, the direction of the market can be determined 
with certainty when the two indexes confirm each other.  Both the DOW 
Industrials and the Nasdaq have made lower lows.  It appears that the DOW is 
making a lower high.  If the Nasdaq fails to make a higher high, it will 
confirm the DOW's downtrend and confirm a bear market according to DOW 
theory.

That's what I got from my "book learnin'" so far.  I am trying to get a 
handle on Elliot Wave now.  An analysis of the current DOW and Nasdaq by 
some of our Elliot Wave experts would be instructional and appreciated.

Thanks,
Dan

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