We have been patiently letting this so-far 3% broad market correction unfold. Today, the morning weakness in the face of disappointing macroeconomic data seemed to bring out very high levels of negativity relative to the minimal technical damage that has been inflicted on the indices.
Anecdotal evidence aside, I want to point out a similar bullish divergence to what we observed in late-August, with the high beta small caps in the Russell 2000 (IWM ETF) making a higher low today, while the stodgy mega caps in the Dow Jones Industrial Average (DIA ETF) made a lower low this week. Because of the risk appetite associated with the small caps, this is a bullish divergence. Watch this development into next week to see if the bulls can build on it.