Nasdaq Big Cap (Qs) vs Russell 2000: Why Guess?

May 11, 2006 1:30pm by

With the Nasdaq down 1.56% intraday, and the NDX 100 off more than 2%, its time to revisit the issue of sector selection.

We noted earlier this week that Big Cap Tech Continues to Disappoint; Here’s a graphic representation of that:

Russell 2000

Russell_2000

Nasdaq 100 (QQQQ)

Nasdaq_6_months

>

Which of these charts is treating your money better? Again, I am forced to ask why guess? Why not wait until big cap tech reveals itself?

John Roque, the excellent Technical Analyst out of Natexis Bleichroeder, uses the following chart to explain that not only is Big Cap Tech not the place NOT to be, but the move against it may only accelerate:

Spx_tech_relative

Print Friendly, PDF & Email

What's been said:

Discussions found on the web:
  1. Bob A commented on May 11

    it’s not over till it’s over, but looking at longer term trend line on russell 2000, like back to 92 or so, appears to be a bit of a bubble no?

  2. Bynocerus commented on May 11

    Bob A,

    Back in the 70’s there were a couple of years when the small caps rallied 50% or more. Considering how similar many conditions now seem to be with then, I wouldn’t worry about a bubble just yet, but they sure have run a long way.

  3. GRL commented on May 11

    Anyone have any thoughts as we seem to be accellerating our loses (as of 12:27) as we head towards the close?

    Also, BR, how are those VIX calls doing?

  4. Bynocerus commented on May 11

    Mentioned to an old buddy of mine that I was getting big time short today. Told him my two worries were that we were oversold and that there was a gap to fill over 60 points above where we are now. His response:

    We can always get more oversold, and there’s a gap that’s never been filled down at Nasdaq 1170. If gaps ALWAYS get filled, well…

  5. GRL commented on May 11

    Byn:

    I wish you luck, though I’m not into shorting stocks myself. (I don’t want to “lose my shorts.”)

    I wonder if we are seeing the beginning of what usually happens after a Hindenburg.

    In any case, it is nice to see a little action. The flat to slightly up action, day after day after day, was getting boring.

  6. emd commented on May 11

    what the heck happened today?? there’s risk in investing??

  7. Jack commented on May 11

    Nice to see someone talk about the divergences between the different markets. I was focused on the dow vs nasdaq, but now i see that theres more to it.

    Today felt like traders finally to a look at the macro picture and realized things aren’t as good as they thought.

  8. jim commented on May 11

    Does todays action mean Jeffrey Saut’s “melt up” has been called off?

  9. Abe commented on May 14

    When the crowds panic, some smart ones make money.

Posted Under