Russell 2000 Showing Relative Weakness at the New Highs

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.

Indexes 30 Minute Charts

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.

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