The markets staying lofty, some parts of it anyways. There has been lots of talk of divergences lately. This article stating that 47% of the nasdaq is in a bear market was making rounds last week. The large caps have been propping up the major indices but there has been some serious damage under the surface. Take a look at the russell index etf IWM, it is forming what appears to be a two headed H&S Topping pattern. Double/Quadrouple top whatever you want to call it small caps are looking weak and have been diverging from large caps for most of the year.
We are entering a time of year that is usually extremely seasonally weak. Here is a seasonal chart Posted by jhburton on stocktwits with different lengths of time averaged.
Looking at the technical picture of the SPY we can see that the market, at least the large caps are continuing to find buyers up here at ath as the SPY continues to rip the scrotums off all bears who dare bet against it by shortselling or buying volatility. There is amazing complacency in the market for there being so much damage in small caps and momentum names underneath the surface.
This Divergence between large and small caps needs to resolve one way or the other. My moneys on a breakdown as the free money QE gravy train comes to a halt. Goodluck, make some scratch next week!
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