NASDAQ Up Again for 6th Straight Week While S&P 500, Dow Have Worst Week In 2012: More Sector Rotation?
The NASDAQ extended its gains this week moving higher. This is the 6th consecutive week the NASDAQ has increased. The S&P 500 and the Dow Jones Industrial Averages didn’t perform as well and had the worst week of 2012 so far. Traders got disappointing news from China this week that kept many from making long-term bets and turned toward the tech heavy NASDAQ index for better weekly performance. Economic data this week such as initial jobless claims which were down slightly by 5,000 didn’t help the bullish case. Housing market data was also negative this week and may have led to decreased trader sentiment this week.
Is Sector Rotation, Happening Again?
It’s possible sector rotation is happening after a recent spate of reverse sector rotation that occurred around March 11, 2012 when the Russell 2000 index made a comeback. The NASDAQ reached an 11 year high this week passing above 3,085 and we believe there is a strong possibility the NASDAQ will continue to move higher as more investors look for riskier assets. Volatility lowered today but downside risks from China having a hard landing should be monitored in the medium run although some believe China’s cooling down may be good for global growth. Headline risk from Europe may return in the short run and it will be important to see how traders react to news from the region.