This week I'm taking a look at the year-to-date returns on three major indexes: the Dow Jones Industrial Average (DJIA), the S&P 500 Index (SPX), and the Nasdaq Composite (COMP). The tech-heavy COMP leads the other two indexes by a few percentage points this year. Does it mean anything going forward when the COMP leads the other two bigger-cap indexes? The analysis below might help us answer that question.
First, here is a table showing how the indexes have typically performed from April 15 of each year through the rest of the year. The COMP has averaged the biggest gain for the rest of the year, at 9.34%. Unsurprisingly, the returns for that index have been the most volatile, as measured by the standard deviation. The SPX and Dow have averaged a return of 6.52% and 5.66%, respectively.
When the Nasdaq Leads: The COMP is up just over 5% so far this year, which leads the SPX (up 1.79%) and the Dow (up 1.2%). Over the last 40 years, the COMP led the indices year-to-date through mid-April almost half the time (18 of 40 years). The table below summarizes the returns over the rest of the year when this occurs. It's a good sign when the Nasdaq leads. The average returns in the table below outperform their typical returns (seen in the table above). Also, each index has been positive more than 80% of the time for the rest of the year when the COMP leads at this point in the year.
The Case for Big Moves in IWM and QQQ
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