The Nasdaq Out-Performance May be Slowing

A couple of weeks ago the Nasdaq took over leadership for certain among the indexes. I made the case in Is There A New Index Leader? at the time. Running the clock forward a couple of weeks sees that the this out-performance may be coming to an end. If you look at the ratio chart of the Nasdaq to the Dow Jones Industrial Average, using there ETF doppelgangers $QQQ and $DIA, you can see that the ratio leveled out this week. The Relative Strength Index (RSI) of the ratio has been overbought and worked that off, so it may be ready for another leg higher. But the Moving Average

qqq-dia

Convergence Divergence indicator (MACD) is level on the signal line at a very high level with a histogram that is pulling back. This suggest more pullback is in the cards. Not a sign of panic yet, but if you have been playing the Nasdaq against the Dow it may be time to take some profits. Maybe buy some burgers, dogs and beer and celebrate this weekend.

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