Wall Street looks to Nasdaq for leadership

Nations need good leadership. So do NHL hockey teams. And, surprisingly enough, so does the stock market.

That’s why the recent resurgence of the tech-stock-dominated Nasdaq, which Thursday hit its second record high in the past five trading days, has Wall Street bulls hoping for more.

The Nasdaq -- up 4.4% this year and at a record 5228.40 after Thursday’s new peak -- and its high-octane tech and biotech names is widely viewed as a so-called bull market sector, whose leadership is essential in a healthy, robust bull market. For much of the year, more defensive sectors, like utilities and telecom stocks, have been leading the stock market higher, a fact that didn’t sit well with Wall Street traditionalists that prefer tech stocks to set the pace.

But a rotation out of the safe into the more daring names might be underway. “The Nasdaq,” says Ryan Detrick senior market strategist at LPL Financial, “is finally starting to lead.”

As proof, Detrick points to the Nasdaq breaking out to a new high last Friday -- its first record in 264 days -- and following up with a new record Thursday.

So what’s next for the Nasdaq? Detrick went back and looked at the seven other times since 1979 the Nasdaq made a new record after going more than 200 days without a fresh peak. The results were bullish. The Nasdaq was up 3.1%, on average, 1-month later, up 4.2% 3-months later, 13% higher 6-months later and up 14.5% a year later.