A Divergence I Did Not Expect
The two charts here show the Dow Jones Industrial Average and the Nasdaq-100. The Dow, as you know, is 30 of the largest multi-national companies. The Nasdaq-100, on the other hand, is mainly an index for tech stocks. The largest tech names and it is heavily weighted in that direction. Recently, something happened: The Dow broker out to new all-time highs and the Nasdaq-100 sunk lower again.
It's not often that you hear people talk about the Dow with excitement. The more exciting names are tech names and crypto. Exciting stories. Here the top 10 holdings in the Dow:
UnitedHealth Group Inc UNH 7.06%
Goldman Sachs Group Inc GS 6.79%
The Home Depot Inc HD 5.49%
Microsoft Corp MSFT 4.94%
Amgen Inc AMGN 4.78%
Salesforce.com Inc CRM 4.60%
Caterpillar Inc CAT 4.59%
Visa Inc Class A V 4.51%
Boeing Co BA 4.50%
McDonald's Corp MCD 4.38%
My only takeaway from this is that the market is voting on a global recovery of sorts. The back to normal trade. Where people are moving around again, traveling, spending less time online, and getting back to business as usual.
While this trade does not make sense to me, I did not expect the divergence to happen as fast as it did.
So next question... are there any trades or ideas we can takeaway from this?
I actually think the market has priced in these moves so quickly, it's best to sit on your hands for the time being. That is currently what I am doing. I am also not so in love with the Dow or the names in it that I feel the need to chase them. I will hang out patiently. It's also possible that there really are better places to look into. I personally really like European companies right now. There are some really good companies in the UK, Germany, Italy, Spain, and even the Netherlands. More on that later.
For now, I hope you enjoy this quick post about two indexes diverging and maybe I've opened your eyes up to an idea or two just be showing it here on a chart.
It's not often that you hear people talk about the Dow with excitement. The more exciting names are tech names and crypto. Exciting stories. Here the top 10 holdings in the Dow:
UnitedHealth Group Inc UNH 7.06%
Goldman Sachs Group Inc GS 6.79%
The Home Depot Inc HD 5.49%
Microsoft Corp MSFT 4.94%
Amgen Inc AMGN 4.78%
Salesforce.com Inc CRM 4.60%
Caterpillar Inc CAT 4.59%
Visa Inc Class A V 4.51%
Boeing Co BA 4.50%
McDonald's Corp MCD 4.38%
My only takeaway from this is that the market is voting on a global recovery of sorts. The back to normal trade. Where people are moving around again, traveling, spending less time online, and getting back to business as usual.
While this trade does not make sense to me, I did not expect the divergence to happen as fast as it did.
So next question... are there any trades or ideas we can takeaway from this?
I actually think the market has priced in these moves so quickly, it's best to sit on your hands for the time being. That is currently what I am doing. I am also not so in love with the Dow or the names in it that I feel the need to chase them. I will hang out patiently. It's also possible that there really are better places to look into. I personally really like European companies right now. There are some really good companies in the UK, Germany, Italy, Spain, and even the Netherlands. More on that later.
For now, I hope you enjoy this quick post about two indexes diverging and maybe I've opened your eyes up to an idea or two just be showing it here on a chart.
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Read my blog here: scheplick.com
Follow me on X here: x.com/scheplick
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