Much like the small caps, the micro-cap index (pictured below on the daily timeframe) has been diverging from the senior averages for a while now.
Feel free to drop your analysis of whether you think they break higher and negate the potential topping pattern, or instead if the bears can finally seal the deal.
Given that Friday’s sell-off negated Thursday’s promising rally, I am still inclined to say they break down.
Where do the micro-caps fall in the market’s food chain gong forward?
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IWM and IWC are the early warning indicators of liquidity leaving the system and a change in risk-on attitude. We have a very dangerous setup in the making. Extreme caution is warranted. The market is three dimensional. The longer term trend looks poised to change. My fear is that it will not be a rolling top like 2007 and 2000. This could be a 1929, 1987 top due to the structure of this advance. good luck everyone.
I’d agree with this. I personally think the US economy is getting better, but equity valuations are artificially high and margin debts are a hazard with rising rates coming. The 1987 crash was erased a year later then it lead into the 90s, and I’d expect a similar scenario to play out. Technically, it looks like a nice diamond top, but I’d feel more comfortable short below those SMAs
Strange. In a secular bear market I’d expect the low of 666 on the S&P to be bettered.
Great points, I agree BlueStar
Chess – if you’re trying to scare the hell out of Raul & I with that picture of RW savaging our duck… it’s working on me…
Pulling back a bit and looking at the epic run the IWC went on from 2012/13, it had to slow down at some point. The optimistic bull in me would like to view this year’s action as just longer term digestion.. but I don’t know. If you asked the duck up above, “digestion” is the end of his road…
um, evidently there is no professional courtesy between waterfowl.
Greg, I’ve only known RW to be a gentleman. I am appalled!
Hilarious, Unc
Chess
Thoughts on RIO please. Is this ready to break down or moving sideways without any intent?
bear54,
We do this type of Q&A nonstop in 12631. You should check us out.
Operator,
You would be correct sir.