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The above table looks at returns over the past 100 days (actually 103 days). It feels like the broad market has done OK of late, yet when looking at performance, the S&P has been rather flat. Actually really flat (0%), according to data coming from Yahoo finance.
The Russell 2000 was in the news last year for being an under performer. As you can see over the past 100 days, Small Caps have actually done well, as they are leading this pack, up 7% more than large caps.
5-months ago yesterday, the Power of the Pattern noticed that the Russell/SPY ratio had one of its largest declines in the past 10-years, taking it down to support at (1) and driving momentum to its most oversold levels since 2007 at (2).
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At the time Premium members were instructed that two potential trades could be put in place. (A) go long Small Caps or (B) establish a pair trade of Long Russell/Short S&P 500
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The above table reflects that Small Caps have nearly doubled the performance of large caps in this time window. This trade deserves watching closely due to the price situation that the Russell finds itself at right now below!
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Did the Russell create a bullish inverse head & shoulders pattern over the past year? For a good deal of time last year, the Russell found overhead resistance pretty heavy. Of late the Russell is attempting to push above old resistance and is attempting to test old resistance as new support. What the Russell does in the next few weeks could tell us a ton….is this a very bullish pattern or a fake out at resistance.
Stay tuned friends, this index has been a leader over the past 5-months and what it does from here, looks to be more important than usual!
Have a blessed & wonderful spring weekend friends and Thank You for your viewership…. Chris
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