Kass: Market Divergence Should Worry You

These blog posts originally appeared on RealMoney Silver on Oct. 23..

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7:20 a.m. EDT

It appears that, at least on the basis of yesterday's reversal and this morning's futures bump, neither rain nor sleet nor structured investment vehicles can stop the equity market.

More significantly, nothing seems to be able to stop the anointed stocks -- those institutional favorites Research In Motion (RIMM Quote), Apple (AAPL Quote), Google (GOOG Quote), et al. -- that keep on leading the pack.

The admiration for growth has at its core a group of companies that have shown and continue to show an ability to innovate and take market share from weaker competitors. The profit growth demonstrated by these companies shines ever more conspicuously above the rest against a backdrop of slowing corporate profit growth.

The divergence between the heavy-lifting Nasdaq, which embodies many of the anointed ones, as contrasted with the lagging S&P (particularly of a financial kind), continues to "bear" watching, as a narrowing in the market leaders typically precedes a broader market decline.

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9:05 a.m. EDT

A Hindenburg Omen?

I wanted to follow up today's opening missive by raising the possibility that we are setting up for a Hindenburg event.

As most know, I don't use technical analysis that much, preferring instead to dwell on the fundamental issues.

This is not to say that I totally reject the use of technicals (or people who worship at that altar), and I incorporate it, at times, with my analysis.