Monday, August 6, 2012

Divergence: S&P 500 and Russell 2000 (SPY; IWM)

IWM is the iShares Russell 2000 Index.
Right now this is just a straw in the wind but these things do resolve. In 1999 the Nasdaq was being powered by a handful of stocks. The generals continued charging in January 2000 as the troops lagged.
Over the next couple years the NASDAQ dropped 77%.
From Global Macro Monitor:
Interesting divergence between the S&P500 and Russell 2000 in the month of July.   The S&P is in a classic short-term uptrend, making higher highs and higher lows since bottoming in early June.  The Russell, however, after making a short-term high in July broke its uptrend line and has been making lower highs....MORE 

HT: Abnormal Returns