Quite a few components of the Russell 2000 Small-cap Index down 20%-80% again today (similar to what I pointed out the other day) as the R2K Pain-Train continues. However, the index remains above the bottom of the trading range & key 162 support with big positive divergences at the recent low so on watch for a potential sell signal on a solid break below 162, especially if the divergences are taken out…or…stabilization of the R2K with the technicals potentially firming up to make a decent case to go long (improbable IMO but certainly a possibility).
IWM daily Nov 9th
Seems like a lot of small-caps, which are generally more dependent on issuing debt in order to finance operations & expansions than large-caps, have been imploding recently from the lag effect of the big increase in borrowing costs over the past year or so. I’m also keeping an eye on credit spreads (differential between high-yield & Treasury bonds) for potential early signs of distress in the credit markets.
The recent stark under performance of the small-caps relative to the large-caps is also worth noting with the Russell 2000 index trading 5% above its recent Oct 27th pivot low while the Nasdaq 100 is currently trading 9.5% above its comparable recent pivot low from Oct 26th.