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NASDAQ VERSUS NEW YORK

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This chart shows the performance of the Nasdaq relative to the NYSE Composite. The market as a whole usually does better when the Nasdaq leads (green trendlines) and worse when the Nasdaq lags (red trendlines). Even though the NYSE Composite is performing well in the face of Nasdaq weakness, it would be doing a whole lot better with the Nasdaq leading – or at least participating.

Nasdaq outperformance peaked in Nov-03 and the price relative has declined steadily for over a year. There was a trendline breakout in November 2004 (blue line), but the price relative failed to move above the prior high and formed a lower high in December. The latest decline forged a new reaction low and it would take a move above .30 for the price relative to turn in favor of the Nasdaq again.

The recent problems within the Nasdaq are threefold. It is a one horse race and three of the top four industry groups remain under pressure. This has been the case since late January as the semiconductors took off, but Networking, Internet and Software continued lower or remained flat. Until one of these three joins the semiconductor group to make it at least a two horse race, the Nasdaq is doomed to underperformance.

Chip Anderson
About the author: is the founder and president of StockCharts.com. He founded the company after working as a Windows developer and corporate consultant at Microsoft from 1987 to 1997. Since 1999, Chip has guided the growth and development of StockCharts.com into a trusted financial enterprise and highly-valued resource in the industry. In this blog, Chip shares his tips and tricks on how to maximize the tools and resources available at StockCharts.com, and provides updates about new features or additions to the site. Learn More
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