Why Blue Chips Should Continue to Outperform

I have maintained a spread position long the Dow Blue Chips (DIA) vs. short the Small Cap Russell (IWM) since Sept., 2006. I argued then, and still contend now, that money flows, uneven global economic growth prospects, and the impact of a weaker dollar SHOULD combine to make the BIG CAP-- GLOBALLY POSITIONED -- BLUE CHIPS more attractive than small cap localized businesses. My sense is that all of the action since July 2005 represents a big base pattern that that ended the prior multi-year deterioration of the BIG CAPS vs. the small caps, and the beginning of BIG CAP appreciation (outperformance) vis-a-vis the small caps. From a technical perspective, the spread has to widen beyond a ratio of 1.6400 to trigger a relative BIG CAP upside breakout versus the small caps. MJP 4/25/07 1:00 PM ET (1.5792)