This chart was somewhat disturbing the first time I saw it (around a week ago).
It is the difference between the S&P 500 (SPY) and the Russell 2000 (IWM), essentially the gap between mid-cap to large-cap and small-cap stocks. Why is this chart so relevant? Because small-caps are always the first to fall in times of major correction or bear market.
In 2007, we reached a top of 70 points in difference, which meant that small-cap were starting to fall. We are at the exact same resistance level as of right now! With the correction we have seen on Nasdaq and Russell and with this chart confirming a large difference with the S&P 500 it can lead to thinking that it is due to fall as well.
We'll see what happens, but this is slightly worrying if you're long S&P.
L.F.
It is the difference between the S&P 500 (SPY) and the Russell 2000 (IWM), essentially the gap between mid-cap to large-cap and small-cap stocks. Why is this chart so relevant? Because small-caps are always the first to fall in times of major correction or bear market.
In 2007, we reached a top of 70 points in difference, which meant that small-cap were starting to fall. We are at the exact same resistance level as of right now! With the correction we have seen on Nasdaq and Russell and with this chart confirming a large difference with the S&P 500 it can lead to thinking that it is due to fall as well.
We'll see what happens, but this is slightly worrying if you're long S&P.
L.F.