Nasdaq vs S&P 500 (NQ vs ES): 27 Years of Relative Strength

Why NQ traders watch ES

If you trade Nasdaq-100 futures (NQ), you probably keep an eye on S&P 500 futures (ES). The question is usually simple: is tech leading or lagging the broader market today? A Nasdaq that rises more than the S&P 500 on up days and falls less on down days suggests buyers are favoring big tech. The opposite suggests money rotating out of it.

We used the two most traded ETFs, QQQ for the Nasdaq-100 and SPY for the S&P 500, as long-history stand-ins for NQ and ES.

What we measured

• Correlation: how closely weekly returns moved together, from −1 to +1.
• Beta: how much QQQ moved, on average, for each 1% move in SPY.
• Weeks QQQ outperformed: the share of weeks QQQ beat SPY.
• Volatility ratio: QQQ's weekly volatility divided by SPY's.
• The ratio: QQQ's price divided by SPY's price, a simple line that goes up when the Nasdaq-100 leads.

What we found

• 1999–20070.80
• 2008–20190.92
• 2020–20260.92
• Full period0.85

Exact values from table 2 in this article. Bar lengths share a zero baseline; no new calculation or simulated price path. Read the table and its stated sample and limits in this article.

Two different eras. In 1999–2007, the Nasdaq-100 was the high-beta, more volatile cousin of the S&P 500: almost twice as volatile and moving about 1.55 times as much. After 2008, the two indexes got a lot more alike. Correlation rose to 0.92 and beta dropped to about 1.

Why it changed. The biggest tech companies grew to dominate both indexes. When the same handful of stocks carry the biggest weights in the Nasdaq-100 and the S&P 500, the two indexes are bound to move more alike. We cover that concentration in a separate article.

Leadership was a slight edge, not a rule. Even in 2008–2019, QQQ's best stretch, it beat SPY in only 56% of weeks. Over the full period, 53.6%.

The ratio line: 27 years in three numbers

From late 1999 to October 2002, the ratio more than halved: the Nasdaq-100 lost about 53% relative to the S&P 500 in three years. From that low, it nearly quadrupled. Over the whole period, QQQ's price rose 891% and SPY's 446%.

A trader looking at only one of those periods would come to opposite conclusions. That's the main reason to look at the full history before relying on any relationship between the two indexes.

Does relative strength persist?

This is the question that matters if you use relative strength as a filter. If the Nasdaq-100 has been leading, should you expect it to keep leading?

We tested a simple version. For each week, we checked whether QQQ had beaten SPY over the previous 12 weeks, then looked at the next four weeks.

After leading, QQQ kept leading 58.3% of the time, barely more than its 56.7% base rate.

After lagging, QQQ kept lagging only 45.8% of the time. So more than half the time, it went back to leading.

The differences are small, and the four-week windows overlap, which makes them look more reliable than they are. The honest summary: on weekly data, leadership between these two indexes only carried over weakly.

That fits a broader pattern in the research. Narasimhan Jegadeesh and Sheridan Titman documented momentum in Returns to Buying Winners and Selling Losers (Journal of Finance, 1993): stocks that had beaten the market over the previous three to twelve months tended to keep beating it over the next months. But that effect shows up across hundreds of stocks ranked against each other, over horizons of several months. Two highly correlated indexes, compared week to week, leave way less room for it.

What this means if you trade NQ

• Expect NQ to move a bit more than ES, not a lot more. Since 2008, beta has been about 1.0 to 1.1 on weekly data. Intraday, the relationship can be different, so measure it on your own timeframe.
• Divergence is information, not a signal. A day when NQ falls while ES rises tells you something about rotation. On our weekly data, it didn't reliably predict the next weeks.
• Watch for regime changes. The 1999–2007 relationship was very different from today's. A sharp change in correlation or beta is worth noticing.
• Use it as a second opinion. If your read on NQ is bullish and ES is clearly weaker, the disagreement is a reason to double-check your levels and your invalidation, not necessarily to flip direction.

Some traders track the NQ/ES relationship with a dedicated indicator. We maintain a TradingView tool tracking relative leadership between NQ and ES; TradingView access requires a separate request.

How to check it yourself

1. On TradingView or any charting platform, plot the ratio QQQ/SPY (or NQ1!/ES1!).
2. Add a 12-week change to see whether the Nasdaq-100 has been leading.
3. Note the next four weeks every time leadership flips, and keep a count.
4. Compare with how often the Nasdaq-100 led in any four-week stretch.

Limits

• Weekly data. Intraday relationships between NQ and ES can be very different, especially around economic releases and big-cap earnings.
• ETFs, not futures. QQQ and SPY track the indexes closely, but futures add financing costs and trade nearly around the clock.
• Price only. The ratio and returns leave out dividends, which are higher for SPY. Including them would narrow QQQ's long-run lead a bit.
• Overlapping windows. Four-week windows from back-to-back weeks share most of their data.

How we did it

• QQQ and SPY weekly prices from Alpha Vantage (TIME_SERIES_WEEKLY), with QQQ adjusted by us for the two-for-one split of March 20, 2000.
• Correlation and beta: weekly price returns, by period. Beta is the slope of QQQ's weekly return on SPY's.
• Persistence: QQQ minus SPY over the prior 12 weeks, then over the following four weeks.

Sources

• Jegadeesh, N., & Titman, S. (1993). Returns to buying winners and selling losers: Implications for stock market efficiency. Journal of Finance, 48(1), 65–91. IDEAS/RePEc
• Alpha Vantage. TIME_SERIES_WEEKLY (QQQ, SPY). Data retrieved October 2026.

FAQ

Is the Nasdaq more volatile than the S&P 500? Yes, but less than it used to be. QQQ's weekly volatility was 1.93 times SPY's in 1999–2007 and about 1.1 to 1.2 times since 2008.

What's the correlation between NQ and ES? On weekly QQQ and SPY data, 0.85 over the full period and 0.92 since 2008.

Does the Nasdaq always beat the S&P 500? No. It lost about 53% relative to the S&P 500 between 1999 and 2002, then made it back many times over.

Does relative strength between NQ and ES persist? Only weakly on weekly data: after leading for 12 weeks, the Nasdaq-100 kept leading 58% of the time, against 57% normally.

What does it mean when NQ and ES diverge? It usually reflects money rotating into or out of big tech. It describes the current session. On its own, it's not a reliable forecast.

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Research and education only. Not financial advice. Past results do not predict future returns.

How this article was made: drafted with AI assistance from public data and the sources listed above; facts and figures checked by Gabriel Décarie and Karel Panneton.