Whenever you hear a reference to how the market is doing on the major news networks, the broadcast invariably refers to the performance of the Dow Jones Industrial Average. Ā While the index is not nearly as broad a representation of the US economy as the S&P 500, the performance of the index typically tracks the S&P 500 pretty closely. Ā Enough at least for the average Main St. investor.
More recently, however, the DJIA has been a notable laggard compared to the S&P 500. Ā In a post yesterday, we noted this trend when we highlighted the fact that more than half of S&P 500 stocks were above their 50-day moving average while only a third of DJIA stocks were above the same threshold. Ā The chart below shows the relative strength of the DJIA vs. the S&P 500 over the last ten years. Ā When the line in theĀ chart is rising it indicates the DJIA is outperforming, and when the line is falling the DJIA is lagging. Ā As you can see in the chart, in the last several months the DJIA has been underperforming to such a large degree that the relative strength vs. the S&P 500 is at its lowest levels since the depths of the Financial Crisis!
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