One gauge of the health of the market is to track how the majority of stocks are trending. So far in 2014 the large-cap S&P 500 has racked up record high after record high, but the small-cap Russell 2000 isn’t following suit. Year-to-date the Russell 2000 (“troops”) is in negative territory while the S&P 500 (“general”) is up 8.2%. Stock market leadership is narrowing – a potential red flag.
This interesting graph from Chart of the Day shows the performance of the Russell 2000 Index going back to 2002. The red line represents overhead resistance, while the green line is support. Taking this longer term perspective, the Russell 2000 is sitting at an important inflection point.
♦ Please note that my readings will change without notice, so please don’t buy or sell solely based on anything you read in this blog. ♦