Can the NYSE Rally as the NASDAQ Crashes?
A correction is underway, surely. The models are all very positive, since the NYSE is having a huge rally. Today’s divergence of over 9% between the NYSE (+1.9%) and the NASDAQ (-7.6%) is a continuation of a convergence that is correcting the NASDAQ’s huge gains in the past year as the broad market meandered. Still, a big bear market in the NASDAQ would have serious implications for the economy and the broad market as well. The paper wealth of many investors will plummet, as stock options in new companies become worthless. This will change buying habits. It will also give new meaning to the debt overhang that has grown so large in recent years. Though the models are quite positive, I went to the sidelines at the end of the day, deciding to wait and see how this plays out over the next few days.
