Market Insider

A warning sign? Market divergence worries traders

Beware the market's warning signs: Domm

The volatile selling in Nasdaq and small cap names is making some traders nervous, and technicians say it's a time for caution while the once sizzling names continue to burn.

The divergence between those once hot names and big caps and blue chips was dramatic Wednesday, when the Nasdaq fell like a rock but recovered toward the close to finish down just 13 points, or 0.3 percent at 4,067. But at the same time, the Dow, up 117 points, and the S&P 500 had their best day on a percentage basis in three weeks.

On Thursday, stocks were higher, with the Nasdaq in positive territory as biotechs rose.