Always consider hidden risks
Russell 2000 and DJ Industrial Ratio: At Crossroads ?
July 28 ( From TradingView )
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Financial assets like the SP500 had a very good performance indeed; the small
capitalization start to underperform tremendously against big ones since March
18 2014 and finally reached a bottom on a relative value on October 10 2014.
( See blue line on the chart below ).
It reached on a ratio basis, the highest level ever on March 18 2014 !
It started a severe correction since July 1 but finally reached a new bottom
on October 10 2014 followed by a strong dead cat bounce...
We did break on the downside the 20 DMA ( Day Moving Average )
on July 20 then at 1262.7 and the 50 DMA on July 21 then at 1258.5,
a bad technical sign indeed.
( 20 DMA Yellow Line and 50 DMA Red Line - on the second chart below )
Observe also the Breakdown on the Russell 2000 from a Major Support Trendline broken on June 29 2015 at the 1260 level ( now becomes Major Resistance ). ( Red Trendline on the second chart below - Ellipse )
We are now testing the 200 DMA ( ( Day Moving Average ) zone on the Russell 2000 at 1213.7...
( 200 DMA Green Line - on the second chart below )
On a Ratio basis ( Russell 200 over the Dow Jones Industrial ), the 21 Day Moving Average is in a downward phase ( yellow trendline on the chart below ) since July 7, indicating an underperformance of the Russell 2000 compare to the Mighty Dow Jones Industrial. ( Grey Vertical Line ine on the chart below )
But the most interesting factor is that we are testing a Major Support Trendline that started back on October 10 2014 on that ratio ( Russell 2000 over DJ Industrial ). ( Red Trendline on the chart below - Ellipse )
The Russell 2000 is definitively at Crossroads now...
Russell 2000 and DJ Industrial Ratio: At Crossroads ? $SPY, $IWM #investing #russell2000 #dowjones #SP500
Russell 2000 Over Dow Jones Industrial ( Blue Line ) 21DMA ( Yellow Line )
SP500 ( Candles )
Russell 2000 Index ( Candles)
20 DMA ( Yellow Line )
50 DMA ( Red Line )
200 DMA ( Green Line )