Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
As noted yesterday, the Russell 2000 is showing a lot of relative weakness to the broader indexes that focus on large cap and far fewer names. To that end, the R2K is already down to its 20 day moving average with yet another weak day (nearly a 1% drop), while the S&P 500 and DJIA are not even touching their 10 day moving averages. The NASDAQ is right at its 10 day.
And the transport index has now broken its 50 day.
Should be some interesting days ahead – this sort of divergence should end soon. Either the broader market as reflected in the Russell 2000 should “catch up” (i.e. strengthen) to the indexes reflecting the large caps, or the larger cap indexes should “catch down” to the broader market, if you will.
Under the surface there is a lot of rotation going on, but the themes are changing every few days – last week gold was doing little, this week its running. Housing is weakening but oil services now are in favor. Biotech out this week, etc etc.
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