stocks

A Bullish Leader Turning Bearish Leader

We have used this very simple indicator chart to show how the Small Caps have led the market in 2016, but done so within a post-2013 downtrend.  With the 2016 channel having risen to near the top of the downtrend channel the view has been that Small Caps had an inferior risk vs. reward to the S&P 500.  It does not mean buy the S&P 500 (I remain short both of these items) but on a relative basis the Russell 2000 looks worse from a risk standpoint.

rut-spx ratio

And then there is this piece of crap AKA the nominal daily chart of the RUT.  This market is making itself famous for screwing everybody over on a daily basis (hello happy and not so happy day traders) so an in-day poke below support could be swept under the rug and reversed with ease.  But it looks like it is breaking down from a bear flag that rose to test resistance at the 50 day moving averages.

russell 2000 daily chart

What is interesting is that RUT could drop all the way to the measured target, which includes the SMA 200 and yet remain at a higher low, which means its greater trend would still be up.  That fits current plans perfectly.  Now watch them screw my plan up and kick save this thing, he says rather cynically.

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