Market Leaders Abdicating

The Russell 2000 obviously has an ugly topping pattern.  It has long since nudged to a lower low to the August low and now has eased below March and January.  If it holds below the line this thing will be in a bear trend.  The bears should hope that TA geniuses do not come out and blow horn the DEATH CROSS!!! of the MA’s 50 and 200, which is a Red Herring.  The chart is bearish enough without the help of that hype.

Anyway, RUT was a leader to the upside on this most intense bull market phase, which has been the post-2012 period and that leader is starting to lose its bull market.

 

Another leader was the Semiconductor index, which we have been noting in NFTRH may have been forming a double top.  A test of the 560 area brings on the real fun because that is the big picture breakout area (this thing has a wacky target of 900 based on that breakout).  A problem is that to test the breakout, the index would make a lower low to the August low, which would yank it into a daily bear trend.

Here are some post-2012 leaders in ratio to SPX on weekly charts.

RUT-SPX has broken to a lower low.

SOX-SPX is still up trending, but there’s the double top.

BKX-SPX has been lame for a while now.

Conclusion?  Well, the market’s losing some leadership indexes.  That’s it, that’s the conclusion.  I am not going to sweat this fully anticipated October decline.  What I am going to do is watch the August lows in indexes like the S&P 500 and Dow.  You should too.

A market is not broken until it is broken.  RUT, which I am short by the way, would be broken with further decline.  The headline indexes however, have a little further to go.  So, are we looking at a US stock market buying opportunity or a final opportunity to get out at nose bleed levels?  Answers to come.  People should remain balanced and hold positions (or lack thereof) they can be comfortable with in the meantime.

All along, non-casino patrons (who I would assume make up the vast majority of biiwii readership) should have long since taken the messages of charts like this seriously.