Small Caps Strongly Outperforming
Jun 4, 2008: 9:54 PM CSTFor those of us who mainly follow the “Big Three” US Stock Market Indexes, you might be surprised to find that the Russell 2000 – Small Cap Index – has outperformed the S&P and Dow Jones, and is closer in recent performance to the NASDAQ.
Let’s see the Russell’s recent dominance:
I’m showing the actual price performances of the S&P 500 (blue) and Russell (Red and Black). Notice how the two major US Stock Market indexes have tracked extremely closely throughout most of 2008, but what’s starkly evident is how the two indexes have diverged sharply since mid-May.
The most recent price swing in the Dow and S&P have made a lower high, while the Russell has made a higher high, and could be on track to make new highs for 2008! Who saw that coming?
The Dow has performed poorly in comparison as well (not shown on these charts).
Let’s take a quick look at the amazing strength of the Russell 2000:
Price closed higher today, but is trapped starkly between the rising 20 and the falling 200 period moving averages. Where will price break next?
Momentum essentially is flat, and when price swings are so narrow as they are in the index, the momentum oscillator is essentially useless for analysis purposes (of momentum highs, lows, or divergences).
It will be interesting to watch whether price surges above resistance or breaks beneath its support zones, and what that might mean for the ‘main’ stock market indexes.
Keep your eye on this most interesting development.
