Dow/Nasdaq Ratio Hits a 3-1/2 Year High

The Dow/Nasdaq ratio closed Monday at 5.428, which just barely passed the peak from August 8, 2006. The ratio is now at its highest level in 3-1/2 years.

I should add that the ratio has been very steady over the past few years. Here's a chart of the ratio going back to 1980:

Over the last 15 years, that ratio has been between 4.5 and 5.5 for 74% of the time.

Comments

[coastalpirate]

OK, but what is being implied? Is Nasdaq a screaming buy?, Is the Dow a sell? or do those extremes signal a bear market or the end of one?

[mavericks]

I can only gather from the spike down in the year 2000 when the NASDAQ was clearly in the stratosphere that the higher the number, the more the NASDAQ is undervalued compared to the dow. I would guess the implication is that the NASDAQ is a buy.