How Long Can This Last?
IBM
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large-cap greats of yesteryear continue to be an anchor
on the major indices. In fact, the Nasdaq 100
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the Dow
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$INDU |
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500
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radio personality Paul Harvey says, “time
for the rest of the story.” Let’s
compare and contrast what is really going on.
Take a look at Dow, Nasdaq, Nasdaq 100 and S&P 500
charts.
Now, look at the charts
of the
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IWM |
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IJR |
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MDY |
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There is a definitive bias to
mid- and small-caps that is going on and looks like it will continue. The
major news-making indices are just masking all
this good action.
I have been trying to figure out how long this split
market can last. The question
must remain. Will the big-caps bring down the stronger areas? Very
simply, maybe…but as of now, no. There is precedent for this type of
action. After the “nifty fifty”
bubble popped in the early ’70s, the bear market
of ’73-’74 ensued. Guess what led the next bull market? Yes, small- and
mid-caps…along with all the value stocks
that were forgotten about. Does this
remind you of something? The only difference is that the names have
changed. Instead of Xerox
and Polaroid, the trashing is in the Sun
Microsystems
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SUNW |
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CSCO |
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AOL |
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So, don’t ignore what is going on. I can foresee more of
the same where larger indices
continue to lag, but underneath the surface, good things are happening.
There is one last point I wanted to make. The Nasdaq 100
needs to make what I call a
“goal line” stand here. This 1330-1350 area is vital. With all the
pre-announcements out, odds favor you get a
bounce. If at any time it does break,
look out below for the bigger names. But if it does, based on the plethora (big
word) of good looking charts and based on the great small- and mid-cap
index charts, I don’t believe it has much of an effect…yet. Should
be a fun week.