Don Hays' Market Update -- April 5, 1999
The first quarter did it again. From year-end 1998 through last Thursday's trading, the market-cap weighted NASDAQ Composite and NASDAQ 100 won the honors of the major indices--rising 13.71% and 16.89% respectively. Surprise, surprise, the follow-up winners were also the big-cap indices, the Dow Industrials up 7.00%, and then the S & P 500 up by 5.25%.
But that is the good news. When you look at the average equity mutual fund you find them up by a meager 0.97%, and from there the news gets worse. For instance, the Value Line Arithmetic average that equally measures the action of 1700 large stocks was down 3.5%. As you compare the S & P mid-cap and small-cap indices, you find them also down 6.33% and 9.23% respectively. So even with the rockets exploding, marking the celebration of achieving the Dow 10,000 level, a huge percentage of your stocks were down for the quarter.
The momentum of the market definitely peaked in November 1998 when over 80% of all stocks were trading above their 50-day moving average. The market managed to hang together fairly well until early January 1999, but then the advance decline line started a steady erosion that has led to today's sad condition. Last week with the Dow still on the threshold of its historic 10,000 celebration, the New York and NASDAQ stock exchanges experienced the highest number of stocks making new 52-week lows since the October crash of last year.
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