≈ It’s Ugly Down There≈
The S&P 500 reached a new record high intraday on Wednesday. So did the Nasdaq 100. With both indexes basking at the top of their trends, you would think everything is sunshine and lollipops in stock land.
And you would be wrong.
Yes, the surface is calm. But there’s trouble down below. If you want an Index that illustrates the turmoil, look no further than the Russell 2000 Index, which is 6% off its highs. Small-caps are where the momentum degenerates live. And many have fallen way, way further than the Index. Take a look at the largest losers on Wednesday, and you’ll see what I’m talking about. Pot stocks, energy stocks, high beta stocks, speculative stocks – they all got torched from 3% to 10% on the session.
Many traders are discovering the market isn’t as fun when small-caps are out of favor. Their absence says something about risk appetite waning and caution ruling the day.
Which is a crazy thing to say when the S&P 500 is sitting at an all-time high.
Chart of the Day
Poor Russell is Sick
RUT officially registered its second distribution day in a row on Wednesday and is now testing its prior pivot low. It’s not a good look. Those mean old bears now have cheerleaders yelling for small-caps demise. “U-G-L-Y, you ain’t got no alibi, you ugly, hey, hey, you ugly.”
Video of the day
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