Russell 2000 Showing Relative Weakness at the New Highs

Nov 20, 2014: 11:29 AM CST

A quick “Quad Index” Grid shows us that the small-cap Russell 2000 is showing relative strength to the other major US Equity Indexes.

Let’s take a moment to update our charts and highlight this situation and what it may mean going forward.

I’m charting the futures contracts for the main index markets and we’re seeing three indexes strong and trading near their recent swing high from November.

However, the Russell 2000 peaked on November 13th and has turned down sharply from there, giving ground that the other indexes have defended.

The divergence is another caution signal in a market that continues to charge ahead full-speed without hesitation.

If indeed the next broader swing is to the downside for a logical retracement, you may want to focus on short-selling the weakest component which could be the Russell index.

Otherwise, if instead we see additional upside trend continuity in a short-squeeze, then focus on the strongest markets which would NOT include the Russell.

If instead you would prefer to trade ETFs, my friend John Carter just released a video on some of his favorite ETF options strategies which I’ll also link below:

Corey Rosenbloom, CMT
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2 Responses to “Russell 2000 Showing Relative Weakness at the New Highs”

  1. Rajat Says:

    My personal aim to just simply avoid trading on these unless there is perfect opportunity but I am very lucky that I have got OctaFX broker that has amazing analysis service for all currency pairs, commodities and indices so this helps me with any choice I make I can pull it off with comfort and at the same time they don’t charge anything for it but I get it completely free and I don’t even need to have account with for this.

  2. Salman Says:

    Maybe this is the good time to have short trades, but still we have to be good in risk and money management. I always love the reports by this blog, as they are pretty helpful and update us with the whole situation. I am careful with trading and that’s why I use 2-3% risk maximum per trade and given I get 50% bonus from my broker OctaFX, it is seriously helpful and allows me to do trading with little bit of freedom.