Something Big Happened Yesterday

The $IWM has had no net price growth in the last 3.5 years. For the previous two years, it has been trading between roughly $170 and $210. Maybe, just maybe, this is the beginning of something, and that would be a welcome change.  

If yesterday's action truly becomes real, you want to focus on small-cap names and stocks with little or no price growth over the last two years. In other words, stocks are in bases, such as $GDRX and $WRBY, to name a few. And maybe the biotechs that I wrote about here

This year, we saw negative breadth divergences like we had never seen before; I wrote about it here and here.

The market has been hijacked by a few stocks that have done all the heavy lifting, creating an illusion that all is well (THE MAGNIFICENT 7).

A couple of days ago, the Small Cap Russell 2000 hit 20-year lows relative to the S&P500.

I can post one hundred similar negative divergence posts from the last couple of years, but I won't bore you with that; I think you get the point.

ON THE FLIP SIDE.

While this potential Small-Cap breakout might be real, you need to stay vigilant. Markets usually top with breadth expansion. For now, I will proceed as if this is real because we need a lot more breadth expansion to consider it a warning sign.

Managed Assets.

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