When looking to get a handle on the overall health of the market, many technicians like to pay attention to Transports and Small Caps, but judging by the relative strength charts of the Dow Jones Transports and Russell 2000 versus the S&P 500, the broader market hasn’t been quite as strong. First, in the case of the Dow Transports, the index hasn’t been much of an outperformer at any point in the last year. Over the last month, though, the Transports have been extremely weak and are currently near their lowest level on a relative basis at any point in the last year.

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The performance of small caps versus the S&P 500 has been a lot stronger than the Transports, but even here, we’ve recently seen a bit of weakness in the group. From when the China tariffs were first announced earlier this year right up until mid to late June, the Russell 2000 was a steady outperformer. Over the last month, though, the Russell 2000 has been a laggard. Granted, the index got a bit ahead of itself in the run-up, but notwithstanding today’s bounce, for the last couple of weeks as the S&P 500 has been in rally mode, Transports and Small Caps have been left behind. 

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