Dr. Duru | Mar 15, 2013 06:23AM ET
I do not pay much attention to the Dow Jones Industrial Average (DIA) and greatly prefer the S&P 500 (SPY) as being more representative of the stock market. However, anyone with a pulse has likely heard or read the breathless headlines about the Dow’s all-time highs.
Note that when the stock market exploded higher to start the new year, T2108 went as high as 85%. The 20 percentage point differential between then and now, represents a large number of stocks whose performance has sharply diverged from that of the S&P 500 (or stock market in general). This setup provides a very good reason to hold the enthusiasm or joy: the lofty heights are not getting broadly shared.
Currently, T2108 has bounced between 60 to 65% since March 5th. The S&P 500 is up a mere 1.3% since then. Without more participation, the S&P 500′s rally should continue to lack luster. I will be looking to see whether T2108 can break out and finally join the S&P 500 in its upward climb. Until then, I will continue to assume that the rally is at high risk of an imminent correction.
Be careful out there!
Full disclosure: long CAT
Below you may find the video.
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