Market shift?

I know that this board isn’t into market timing (and neither am I), but i have noticed something a little different the last week or so and thought I would share…

As a measure of the market performance I tend to follow a few indexes, S&P, NASDAQ, R2000, and Dow. Now, by follow I really mean that these four indexes are listed out as I check on how my stocks do each day. What has been kind of interesting to me is that over the last 7 or 8 trading days the NASDAQ has had worse performance than the S&P and Dow pretty much every day. Now that might not sound very important, but it has been a pretty long time since that has happened. In fact, the NASDAQ has had the best performance on almost a daily basis for months. I haven’t really tried to check but I don’t really recall remembering even 3 days in a row of worse performance.

Anyway, I am wondering if a shift is happening. Just curious and this really doesn’t matter too much to me as it wouldn’t cause a big change in my process, but there has been quite an outperformance by the NASDAQ over the last probably 10 months…

Anybody else notice this, or care?



Anybody else notice this, or care? - Randy

Oh, yes indeed, Randy! My preferred “canary” is IWM, the Russell 2K ETF. The smallest companies provide the best reports from “ground zero.” Whenever I see the IWM falter and decline (as has been happening lately), I brace for a “correction”.

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It feels a bit like that. One feature I definitely observe is that volatility seems to have gone up - there’s some pretty wild swings up and down with earnings releases this quarter.

Hi Randy,

I noticed and I care, but I’m not inclined to do anything about it unless it would be to short the NASDAQ if it goes much further.

I use these charts almost every week. Note the middle column, top and bottom rows:$INDU,$S…

I see this as part of the price of having such good results YTD. And maybe it’s time for a breather. I mean, if the NAS ran away from the S&P 500 at the previous pace for an entire year, the market would surely fracture.

One tech crash was enough for me. Maybe we could back up a bit and look at 5 yearw of the NAS. Doesn’t change a thing, except perspective. But sometimes that’s all we need.…


To balance out the pessimism/optimism part of the equation (for me and you) here is a recent warning from one of the smartest investors ever to grace the halls of TMF. Whatever your opinion of his view may be, it is a very interesting and informative read.…



Agree. I sign up to James Montier’s cogent view (recent article in Barrons) which is the one I am acting on, while still doing the Prince Polka (Chuck’s Charlston?). Before taking to the dance-floor, I glance around for the fire-exit.

The effect of recessions in general and the exacerbated effects of the next in particular are known knowns, and known unknowns respectively. Many working on the Street have never experienced one, adding wonderfully to the asset-gathering mindset on risk!

Here, in order to have recurring revenue, you must first have revenue, is worth remembering in terms of valuation and risk.

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To balance out the pessimism/optimism part of the equation (for me and you) here is a recent warning from one of the smartest investors ever to grace the halls of TMF. Whatever your opinion of his view may be, it is a very interesting and informative read.

2017 - 1929 = 88

So little has changed in 88 years that one might as well read yesterday’s paper to bet on the market today. One has to believe this if one is to believe Dan’s recommended post. Things that have not changed at all: GAAP, the Internet, the stock market, option pricing.

These ideas were forming in my mind when I came across (god is dead) Nietzsche just behind champagne and cappuccino. Surely someone with too much time on his hands, more than my short attention span can handle. I glanced towards the end of the article. Confirmation. Too long. Ignore. Besides, Nietzsche’s sister gave her brother a bad name. A couple of weeks ago I tried reading Zarathustra (for the second time). Maybe it was Nietzsche who gave himself a bad name after all. If you really want to know what the Persian really had to say, read it in the original German otherwise you are just reading the opinion of the translator*.

About the market shift, I think Mr. Market is realizing once again that there are no magic potions and is correcting accordingly.

Denny Schlesinger

  • Unfortunately my German is not good enough, it’s too underpowered to read such overpowering stuff.

Hmm. The original post seems to be about a shift, not a crash. Market rotation is possible, perhaps even probable.

How do decide if it’s one, the other, or neither? I suggest supply and demand.

What happens during a rotation? Big-money investors sell stocks that were leading and invest in another sector, one that was not leading. The push of the large amounts of money increases the prices in the new leading sector. The stocks being sold are dropping in price with higher-than-average volume. Stocks being bought increase in price with higher-than-average volume.

What happens during a correction or bear market? Big money sells a lot more than buys, across the board. So how would you see that? Most stocks begin to fall in price on larger-than-average volume. The few stocks that don’t sell off initially drop less than most, but the volume is lower than average.

If the correction or bear gains momentum, the price drops and volume increases begin to amplify. More stocks are declining than advancing (the “A/D” line).

Right now, we have a lot of anxiety being expressed. But prices are not falling consistently in most or all sectors. So it’s not (now) a crash.

If the NASDAQ is falling while the Dow is rising consistently, that could indicate a rotation. So look at the previously leading NASDAQ stocks. Falling on higher volume? What about the rising Dow stocks? Rising on higher volume?

Watch the big-fund investors. Very difficult to hide movement of millions and billions of dollars.