Bearish Divergence?

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We have heard many times probably since July from some of the bearish stock market tabloids how the NASDAQ making a new high while the DOW JONES and S&P 500 did not was a bearish divergence and to look out below.

Today we see the NASDAQ 100 made a new high while the DOW and S&P 500 did not. Based on what has happened over the past months when this divergence has occurred more than once, we see no reason to expect that this is a signal of a stock market high. We often say that anything can happen and usually does, but this particular example of divergence has not stopped the rally, bear market rally or not, from continuing. We would expect it will be more than this type of divergence to make its mark and take its toll.

Jeff Majer
Diego Pilar

jmajer@mfglobal.com
dpilar@mfglobal.com

312 261-7380
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