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| This isn't the 1920s. Dow Theorists who rely on the Dow Transportation and Utility averages to predict intermediate trends don't have a clue. Market action these days revolves around the Dow-30, SP-500 and Nasdaq Composite (and their trading proxies). Within these major indices, you'll find everything you need to know to measure the sentiment that spins off trading opportunities. Convergence-divergence between these indices offers powerful feedback about current market conditions. When Nasdaq leads the big caps, it points to a speculative (or fearful) tech market with sharp price change. SP-500 or Dow leading Nasdaq signals a "flight to safety", with big money moving the markets, often into a sideways pattern. |
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