Small Caps Are Struggling
The S&P 500 keeps hitting new highs, but the Russell 2000 small cap index hasn’t been so fortunate.
RUT has gone almost four months without a new record level. In contrast, the Dow Jones Industrial Average and Transports haven’t hit a new high in over two months. The S&P 500 and Nasdaq-100 hit new highs this week.
A few bearish patterns stand out on the small cap chart. First, notice the lack of bounce at the 50-day and 100-day simple moving averages (SMA). This is different from the earlier rebounds at those lines in May and June.
Next, the shorter time frame: RUT’s 8-day exponential moving average (EMA) crossed under the 21-day EMA last week and has remained below it.
Turning to the longer-term weekly chart, we see a bearish inside candle at the end of June. A red bar followed and now we’re in another down week:
It’s not totally bearish overall, but there are growing signs of weakness and poor relative strength. If the market has summer volatility, the sellers may begin their work in RUT.
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RUT has gone almost four months without a new record level. In contrast, the Dow Jones Industrial Average and Transports haven’t hit a new high in over two months. The S&P 500 and Nasdaq-100 hit new highs this week.
A few bearish patterns stand out on the small cap chart. First, notice the lack of bounce at the 50-day and 100-day simple moving averages (SMA). This is different from the earlier rebounds at those lines in May and June.
Next, the shorter time frame: RUT’s 8-day exponential moving average (EMA) crossed under the 21-day EMA last week and has remained below it.
Turning to the longer-term weekly chart, we see a bearish inside candle at the end of June. A red bar followed and now we’re in another down week:
It’s not totally bearish overall, but there are growing signs of weakness and poor relative strength. If the market has summer volatility, the sellers may begin their work in RUT.
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
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