The compx shall lead the way...

The above chart shows the history of the $compx, $spx and $indu from 2/1971, when the $compx started @ 100. ($indu was adjusted to equal 100, while $spx = 94 during 2/1971).

Assuming that 2000-200? is analagous to 1970-1979, all three indices will be mired in trading ranges. However, note that the $compx is the only "mechanical" index as no selection committee mulls over the composition of the $compx. Interestingly, $compx convincingly broke out of its 1970s-trading range in July 1979, while $spx didn't break out of its range until July 1980 and $indu until January 1983. Why is this the case?

As $compx is the only mechanical index, $compx better reflected the movement of the market away from the industrial-70s to the tech-80s. Note that during this period the performance of companies like AMGN and INTC (and Wang/Lotus/etc) were captured by the $compx and not by the $spx or $indu.

Lesson: when $compx recaptures its old highs/breaks out of the current range, many technical analysts may talk of "waiting for confirmation in the $indu or $spx." The above chart demonstrates that investors waiting for confirmation of the $compx breakout in 1978 would have missed a 15%-40% run-up in the $compx. The $compx/ndx should be able to pick up the stocks that will lead the post-tech bull run whenever that may be. Also, note the extreme volatility of 1979-1982 following the calm of 1976-1977. The death of the bear was violent.