Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Stocks

Small Caps: Is This Group Friend Or Foe?

by December 18, 2022
December 18, 2022
Small Caps:  Is This Group Friend Or Foe?

Since the S&P 500 broke out above price resistance established in 2000 and 2007, the secular bull market rally has been led by the NASDAQ 100’s influence. If we compare relative performance (to the benchmark S&P 500), small caps and mid caps have been quite unreliable, while the NASDAQ 100 has clearly been the steady leader:

The black-dotted vertical line is drawn at roughly April 2013, when the S&P 500 finally broke out of that miserable consolidation and secular bear market pattern that began in year 2000. In the bottom panel, you can see that the NASDAQ 100’s relative strength was the driver until the end of 2021.

But what about small caps. They actually performed extremely well after the pandemic began and into 2021 as they soared on a relative basis. After hitting a relative bottom during Q1 2022, small caps have once again been uptrending. Another way to view this relative strength is with RRG charts. Below are daily and weekly RRGs:

Daily RRG: Small caps vs. S&P 500:

Weekly RRG: Small caps vs. S&P 500:

These two RRGs tell different stories. The daily chart shows that small caps have been lagging in recent action and are currently in the bottom left “lagging” quadrant. But the longer-term weekly chart shows this same asset class in the upper right “leading” quadrant. So the question becomes, “is the recent weakness just a bit of relative profit taking?

Well, for me, it comes down to the absolute price chart and I like to view the daily price action. So let’s check that out on the $SML:

The red circles/ovals are all problematic and potential warning signs. The daily PPO has crossed its centerline in bearish fashion. Price action, after nearly breaking out earlier this week, has since lost both 20-day EMA and 50-day SMA support. The RSI has moved beneath 40. These are all signals that a downtrend could be resuming. The two positives I see are the overall relative uptrend (bottom panel) and the fact that key price support just below 1140 hasn’t been lost.

At this point, I’d still consider small caps to in the bullish camp. But we’re seeing current deterioration, and if price support is lost, the odds suggest we’ll be moving lower.

On Saturday, January 7th, EarningsBeats.com will be hosting our 4th annual MarketVision event – “MarketVision 2023 – The Road Ahead: Navigating an Uncertain Market”. It’s a FREE virtual event and everyone is invited. My good friends, Dave Keller, Grayson Roze, and Julius de Kempenaer from StockCharts.com, will be joining me for a very educational event. Did I mention it’s FREE – with no credit card required? CLICK HERE for more information and to register NOW. Because it’s free, we’re very likely to reach room capacity, so SAVE YOUR SEAT TODAY! I’ll see you the 7th!

Happy trading!

Tom

0
FacebookTwitterGoogle +Pinterest
previous post
DC Democrat fights own party over violent crime response: ‘Truly puzzling’
next post
Chip Roy says border will shift from Biden’s crisis to GOP’s if McConnell passes spending bill

You may also like

From Relic to Reckoning: Can Gold Surge to...

April 12, 2024

DP Trading Room: Carl’s Grab Bag! – Chipotle...

June 24, 2024

An Awesome Breakthrough in S&P 500 and Nasdaq:...

July 5, 2024

New Dow Theory CONFIRMS BULL Phase!

February 28, 2024

Sector Spotlight: Risk to S&P as Technology Under...

August 8, 2023

Market’s At RISK in The Mega Cap Bloodbath!

October 26, 2023

Do You Believe In Equal-Weighted ETFs? Really?

September 14, 2022

XLF’s Record Highs: Buy the Dip or Bail...

January 31, 2025

Distribution Alert: QQQ Looks Top-Heavy as Energy Stocks...

August 6, 2023

Regional Banks — From March 6th to March...

March 10, 2023

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Financial Surveillance Is Expanding—But So Is the Resistance

      May 23, 2025
    • SCOOP: House GOP memo highlights Republican wins in Trump’s ‘big, beautiful bill’

      May 23, 2025
    • Don’t Put a Tariff on Barbie: Global Trade Increases the Variety and Lowers the Price of Dolls and Almost All Else We Buy

      May 23, 2025
    • US investor group in talks to buy OnlyFans in deal reportedly worth up to $8bn

      May 23, 2025
    • Major Russia-Ukraine prisoner swap is underway, official says

      May 23, 2025
    • Applying Key Ratios to the Broader Market Surge: Are We at the Threshold of a New Trend?

      May 23, 2025

    Categories

    • Business (8,036)
    • Investing (1,983)
    • Politics (15,358)
    • Stocks (3,101)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved