Should investors “Love/Respect” the message from the New York Comp. Index?

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As I shared in the chart, it is easy to see that the New York Composite Index and the S&P 500 have traded in lock-step over the past 15 years.  In 1999, the NYSE traded sideways for a few months while the S&P 500 continued to push higher.  After this period of underperformance by the NYSE, both declined in value. 

Of late the NYSE is lagging the 500's performance at (3).  Humbly,  I don't know why the NYSE is lagging the 500 index of late.  I do respect the message it would be sending if this underperformance would continue!

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5 Comments

  1. Nice post. I’ve been watching the same divergence, and take it as a sign that fewer “key” stocks have been driving the upside. The narrower indices, in general, seem to be outperforming the broader. We can blame it on AAPL to some extent, but I think it’s indicative of faltering breadth — a negative for the overall market.

  2. Could not agree more. Also take a look at crb index, it has not been able to pass Oct high, and has been hold off by the down trend line. Credit spread has been widening between cooperate and treasure. By itself it could mean people prefer equities than cooperate bond. But it could also mean the potential economical weakness in the 2nd half of 2012. I do not want to sound bearish, especially with the world Fed on the back of everything.

  3. Would be interested to know what contracts are available to goose the NYSE index versus the SPX and the average daily volumes for each subset. Would say that it is easier for Morgan & Sachs to rally the 500 stocks in the S&P 500 versus the NYSE’s 2000 PLUS equities. Anyone who does not know that the tape is painted on a daily basis to keep Wall Street employed or the man on the street in the market actively buying stocks so the big boys can unload them has not been investing very long. Furthermore, with over 2,000 listed securities including non-U.S. ADR’s and ETF’s, the NYSE index is currently telling us that the rest of the world gets it before we do: the world is rolling over again into recession. This occurred in 1999 and now, with the non-U.S. components reflecting the real world, while Wall Street sucks in the last retail dollar at the top before the Big Kahuna hits. Secular Bear Market folks. Most of you have not kept up with inflation since the Year 2000. Try something like Gold & Silver for a change. Obama’s change in capital gains rates should not affect you one bit, and you may actually make money in the next 12 years.

  4. going back to the 60s one is tempted to plot the relative strenght of these 2 time series. Other similar situation where both indices were trending higher but the SP 500 was trending higher FASTER (= bubble?) was 1972-1973, 1987, 1998 (pre LTCM), 1999 and 2009-2011. Personally I find the ratio more objective but the chart drives the point quite well anyway.

  5. Look at the chart the other way – does it today not show a very similar situation to what we had in the first half of 2003?
    We could have a great time ahead.