Tuesday, October 27, 2009

Small Cap Stocks Have Been Leading The Market Lower

Above is a daily chart of the Russell 2000 small cap index ($RUT) and in the lower pane is a ratio chart that compares the small cap index to the S&P500.

What we are seeing now is a classic double top formation that has developed in the small cap index. Today this index posted its first close below a very significant trendline which began back in March. I usually like to see 2 or 3 closes below a trendline to confirm that a change in trend has taken place.

Notice in the lower pane how the ratio line which has been leading the market higher since last March has broken its trendline several days ago indicating that small caps are now weaker than the overall market. Lets see if this weakness continues.

No comments:


This site may include market analysis. All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Trading and investing involves high levels of risk. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise.
Technorati Profile Finance Blogs - Blog Top Sites