I just returned from New York and will resume posting on this blog. I needed a break from the market and missed some good downside action on the S&P and Dow. I’ve been suggesting for some time now that the S&P would be better for downside trades, and the QQQQ or Nasdaq 100 would be better for long trades. You can see on the chart to the left that the QQQQ in the upper graph has had a fairly smooth uptrend. The Dow 30 etf in the lower subgraph was more erratic on the way up. The S&P 500 or spy etf was nearly identical to the Dow 30. During the break of the last week in the Dow and S&P, the Nasdaq refused to give much ground, and today it moved to new multi-year highs. One might argue that the Dow/S&P has more ground to make up and would be better for long trades, however it usually works out better to go with the winner, and so far the winner has clearly been the QQQQ/Nasdaq. The shallow retracement in the Nasdaq did not alter the upward trend of the regression curve and standard error bands, and the three day pivot went flat instead of turning down as it did in the S&P/Dow. One cause of concern for the broader market is the divergence between price and the advance/decline line during the recent run-up. The Nasdaq/QQQQ seems to be going its own way for the moment. The broader market looks much less bullish. It will be interesting to see if the Nasdaq can lead the way higher, or if another round of selling hits the broader market, if that will pull down the Nasdaq. My gut feeling is getting more bearish every day, but for now trends and momentum is clearly higher for the Nasdaq, and a bit more murky for the rest of the market. Not only has the advance/decline line diverged with the broader market, the broader market is setting up for a divergence with the Nasdaq. It should get interesting.