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Leaving aside arguments over price-weighted indexes, the Dow has recently been doing better—or rather—falling slightly less dramatically than the S&P 500. The two indexes generally move in tandem, but divergences aren’t unusual and we’re seeing one now.

The ratio of the Dow to the S&P 500 is now at a six-year high. As of today’s close, the Dow is 9.64 times the S&P 500. (This is, of course, index value and not the market value of the two indexes.)

If this trend continues, the ratio could soon reach a 32-year high—and if the trend continues further still, the ratio could break 10.0 for the first time in 42 years.

If the Dow had performed as well as the S&P 500 since early 2006, it would be over 1,000 points lower today.

Posted by edelfenbein at October 28, 2008 3:00 PM