Why the Dow is Different From S&P 500 & NASDAQ


QUESTION: Hello,
I have been following you for several years and being retired your emails along with my coffee are a great way to start the day. I want to stay limber and laser focused on one index. I chose the S&P because of the volume; both ETF and options.
I know a rising tide lifts all boats; but you seem to be all about the DOW. Of the two (or three IWM); any comments about which one(s) are more for trading than investing?
Thank you again
CS

ANSWER: Socrates covers over 1,000 markets daily. The Dow is a reflection of the big money and international capital flows. The S&P 500 is more domestic oriented and used among institutions and fund managers, whereas the NASDAQ has more of a tendency to be retail. On the rally up from 2009, the Dow led. Note that at the peak here in 2020, the Dow peaked first, then the S&P 500, and the NASDAQ made new highs into February taking the lead from the Dow. That was the kiss of death and confirmation that a sharp correction was then possible.

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