This is simply a small-caps vs. large-caps effect. QQQQ does not track ^IXIC, so divergence is to be expected; ^IXIC is a cap-weighted composite of all the NASDAQ stocks, while QQQQ tracks the NASDAQ 100 Index, which is a cap-weighted composite of 100 of the largest non-financial NASDAQ stocks. (On Yahoo! Finance, the NASDAQ 100 Index is ^NDX. You'll see that the divergence between the Qubes and ^NDX is very, very small, so no significant arbitrage profits on that pair, anyway.) Since both indices are cap-weighted, the NASDAQ 100 accounts for a very large portion of the NASDAQ Composite. That's why they move together. ^IXIC, however, contains a bunch of smaller stocks that ^NDX doesn't have, so ^IXIC outperforms ^NDX when the smaller companies in the Nas rally (and vice versa), hence the divergence that you see. In 1999 and 2000, large-caps were outperforming the small caps, so QQQQ (^NDX) did better than ^IXIC. That divergence five years ago corresponds roughly to when the current small-cap outperformance began. Compare SPY to IWM. You'll notice that the small caps start outperforming the S&P 500 about the same time ^IXIC began outperforming QQQQ (towards the end of 2001.)
Thank you very much for that explanation - now it makes more sense because I was wondering why the divergence still existed when it's so blatantly waiting for someone to use it. So there's still a significant risk of another divergence then at some point and so it's not worth playing then probably.
Some IRA accounts do not allow options & shorting stocks, therefore in down market the only reasonable holdings are bear funds & the new bear ETF's.