Analyzing the Russell 2000 (small caps) & the Down Jones (large caps), I saw two divergences were formed since the beginning of 2018. In early January 18', the Russell 2000 was making new highs, while the Dow Jones made a line of resistance. The first divergence took place at the end of the October 18', markets dropped heavily 27% and 18%, respectively. A new divergence occurred months later (blue dot lines in both charts). While the Dow Jones was making new highs, the Russell 2000 was not following that path. In the midst of February, both markets entered into a bear market. They dropped 43% and 35%, respectively.
What is next? The Dow Jones has formed a broadening pattern. Price just touched lower line (yellow line) and its close to the last resistance line (purple line). It could become a new support line. We may see sideway prices or even a bit lower in the next weeks, but this could be a bottom. Its too early to call, but from here on it could be bullish for both. We will see!
These comments reflect my opinion, and it is not a investment advice.
What is next? The Dow Jones has formed a broadening pattern. Price just touched lower line (yellow line) and its close to the last resistance line (purple line). It could become a new support line. We may see sideway prices or even a bit lower in the next weeks, but this could be a bottom. Its too early to call, but from here on it could be bullish for both. We will see!
These comments reflect my opinion, and it is not a investment advice.