A Dow In Nasdaq’s Clothing
The last two trading days have certainly been out of the ordinary in terms of relative performance between the Nasdaq and the Dow. Since Friday’s close, the Nasdaq is down 1.7% while the Dow is up 2%. That performance spread of 3.7 percentage points in the last two trading days is the widest gap between the two indices (in the Dow’s favor) since right around the March lows. Three and a half months isn’t a lot of time, but if you take a longer view, this type of short-term outperformance by the Dow has been uncommon. Before the occurrences (on back to back days) in March, you have to go all the way back to July 2002 to find the last occurrence. In other words, before March a period of nearly 18 years elapsed since the last time the two indices saw a similar performance disparity over a two-day stretch.
Before 2002 and going back to the late 1990s, there were a number of occurrences on both the way up and even more so on the way down. Given the market’s performance following the last time we saw a high frequency of periods with similar performance gaps, let’s hope the performance disparity of the last two days doesn’t become a trend.
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