A Key Indicator for Future Market Direction Part 1 of 2
By Stephen Sutherland, author of Liquid Millionaire.Posted in the Category of Investing, Stock Market, Wealth Building, Financial Advice on 1st September, 2010.
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A few weeks ago I read an article in the Financial Times that was written by a chap called Dominic Picardo. Because the article had the headline “Keep an eye on techs”, it immediately caught my eye.
The article started off really well, stating that it pays to keep your eye on the Nasdaq 100. I quote, “...in a genuine bull market, the Nasdaq 100 – currently home to such giants as Apple, Google and Microsoft – usually outpaces the broader-based S&P 500.”
This really was music to my ears because what Dominic said aligns with my own investment philosophy of how the market works.
Let me explain.
In my book Liquid Millionaire, I talk very specifically about how the Nasdaq Composite, the Nasdaq 100 and the chip sector all play a role in helping me to determine future market direction.
I say…“ If the market is rising but being led by the Dow or the S&P 500, meaning the Nasdaq, the Nasdaq 100 and the chip sector are lagging, this normally means that the rally (uptrend) is more prone to fail. But if the Nasdaq, the Nasdaq 100 and the chip sector are leading the market higher, that tells you the rally is more likely to succeed.”
And so how could an article that started off in a way that totally synced up with my investment philosophy all of a sudden totally conflict with my deep held beliefs about how the stock market works?
Rather than tell you now, I’ll save it for Friday’s blog. I think that you’ll be interested in what I have to say because if you are invested right now, I’m sure that if you are like my clients, you’ll want my take on the market.
Well I promise you that on Friday you will get a very decisive verdict, on the markets health, and which direction I believe it’s likely to head from here. Until next time my friend.
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