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Market divergences – SPX, RUT, NDX and DJIA

Market divergences – SPX, RUT, NDX and DJIA

 

Yesterday’s post discussed a divergence between the SPX and the Bond markets, and in particular the TNX which is the 10-year Interest rate index. In today’s post, this video studies the divergence between the 4 major indices – SPX, NDX, RUT and the DJIA.

 

The troubling aspect is that the RUT is clearly in correction territory and is down about 10%. The Nasdaq (NDX) which was also down close to 10% has recovered about half that loss and is now down about 5%. The SPX and the DJIA is at all-time highs, or close to it.

 

Obviously, this is quite a large divergence between the major indices, and once again the conclusion is – something has to give. Either the RUT and NDX have to move up to “catch up” to the other two – or the SPX and DJIA have to come down. Given that we’re seeing a divergence in the Bond markets also, perhaps this is a bit more evidence that a correction could be underway.

 

A small consolation is the price action of the RUT yesterday as compared to the SPX or the DJIA. Watch the video below for a detailed discussion.

 

 


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