The Dow set another record today for the third day in a row. It closed today at 11866.69 up 16.08 points. Does it mean anything to investors?
First a quick review. INDU is an index of 30 industrial companies. These tend to be macro-cap stocks, the largest of the large companies in the economy. They were often referred to in the past as Blue Chip stocks.
For the last six or seven years small cap stocks have out performed large cap and macro cap stocks. Analysts have been predicting for a while that larger stocks might start to catch up. INDU is up 10.72% year-to-date (YTD). The Russell 2000 small cap is up 11.4% so it is still ahead, but the Dow is catching up.
The S&P 500 is up an even 10.0% on the year but at 1353.22 is still 11.02% below its all time high of 1520.77 on 9/01/2000. The NASDAQ is up only 4.58% YTD and is 54.32% (the number looks made up but isn't) below its all time high of 5048.62 of 3/10/2000.
So does a new record in a very narrow slice of the stock market mean anything important to investors? Not a lot really. It may signal better times ahead for macro stocks, but is not a strong enough signal for me to make a style rotation in my portfolio. I am still overweight the R2000 and the S&P600, both smaller cap styles.
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