The Divergence Between The Dow And S&P Is Fixing Itself

dow jones commonDow Jones starring Common

Photo: Funny or Die

Most of the time, the Dow Jones Industrial Average and S&P 500 will move together roughly hand-in-hand.However, the gains in the two indices have been diverging noticeably lately.  Year-to-date, the Dow is up 8 per cent while the S&P is up around 12 per cent.

Much of the discrepancy can be explained by Apple, which is the driving force in the S&P 500.  Apple isn’t even in the Dow.  And Apple is up 42 per cent since the beginning of the year.

But this shouldn’t be considered a weakness in the Dow.  On the contrary, we’ve argued that Apple’s exclusion from the Dow is exactly what makes the index great.

Here’s a chart from the folks at Bespoke Investment Group.  You’ll notice that the divergence is beginning to fix itself.  Why?  Because Apple has been selling off.

chart

Photo: Bespoke Investment Group

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