About Me

Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Friday, April 04, 2014

NASDAQ Comp. Skids In Relative Strength

The NASDAQ, weighted up with techs, net service and an assortment of other high flyers,
has accelerated to the downside compared to The SPX in recent weeks. The frothy ones are
being clipped as momentum players, remembering 1999 - 2000 especially, have moved to
take some money off the table. You have to watch this kind of action. Sometimes it merely
heralds a rotation out of the high beta, high risk game into more stable names and then there
are those times when 'de-risking' grows contagious and the broader market suffers as well.

Emphasis on the hot stocks started to get into 'chase 'em up' mode over last summer and
peaked in early Mar. Since, there has been a clear break in the RS trend line of the NASDAQ
which sees it retreating rapidly to the RS trading band of recent years. NASDAQ Rel. St.

From a short term perspective, this trade is getting oversold, but given the contagion underway
and still extant profits to be secured, the NASDAQ RS line could easily fall back into the
trading band of recent years (See chart).

Also keep in mind with the NASDAQ that if a more general market pullback is getting started,
the 'NAZ" can often lag the SPX when the next upturn gets underway.

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