Russell Breaks Down, Negative Divergence in NYSE New Highs

Almost invariably, when we look back at prior market tops or periods of correction, we see that at least one or two major measures of breadth had signaled the decline. Unfortunately, we also see these divergences between breadth and price during false breakdowns as well – which is why the game is so difficult. It’s hard to know in advance whether a diverging internal indicator is a canary in the coal mine or merely due to resolve positively in the end.

That said, Peter Boockvar tells an important story here with both the NYSE internals and the technical picture for the Russell 2000 small cap index:

Yesterday the Russell 2000 closed below its 200 day moving average for the first time since November 2012. Over the past few weeks it has traded below intraday but always found the buyers on the dip to save the day. This may be a meaningless one day event but I highlight this because if it’s not, it will have broader implications possibly for the rest of the market in terms of the big picture technical’s. To further highlight the growing divergences in the market, Monday’s close in the S&P 500 was just 6 pts from the all time record high close on April 2nd. But, on April 2nd 187 NYSE stocks reached 52 week highs vs 76 on Monday. On December 31st with the S&P 500 close of about 1850, there were 282 stocks closing at 52 week highs. Also, just 65% of NYSE stocks closed above their 200 day moving average on Monday vs 74% on April 2nd and 74% on December 31st.

Josh here – I’ve created the below chart to illustrate what Peter’s talking about. In the top pane you’re seeing he NYSE Composite’s price, teetering just below recent highs. In the larger pane below, a simple line chart of New Highs subtracting New Lows. You can see this ratio dropping off, diverging from the new highs in index price. No es bueno.



Now here’s the Russell 2000 index price chart (top pane), with a ratio chart of the IWM to SPY – small cap ETF vs large cap ETF in other words. In price terms, the small caps are back to their February lows. In ratio terms, they’re lagging the broader market substantially, which sets up a fairly ugly non-confirmation of large cap highs.


You don’t typically want to see large caps struggling at recent highs with less underlying participation by individual stocks – narrowing of participation at highs is how tops are formed. You also don’t typically want to see new all-time highs for the S&P while the more economically sensitive small caps are in a correction. These things can resolve in either direction, but the historical bias is toward a resolution to the downside.


Peter Boockvar
Managing Director and Chief Market Analyst
The Lindsey Group


Check out JC’s take at All Star Charts

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here:

Please see disclosures here.

What's been said:

Discussions found on the web
  1. w88 commented on Sep 22

    … [Trackback]

    […] Read More here to that Topic: […]

  2. bitcoin loophole software commented on Sep 30

    … [Trackback]

    […] Read More Information here on that Topic: […]

  3. click here commented on Sep 30

    … [Trackback]

    […] Info to that Topic: […]

  4. 슈어맨 commented on Nov 09

    … [Trackback]

    […] Find More on that Topic: […]

  5. td easy login commented on Nov 17

    … [Trackback]

    […] Find More here to that Topic: […]

  6. buy ruger magazines online commented on Dec 02

    … [Trackback]

    […] Information on that Topic: […]

  7. buy marijuana online commented on Dec 21

    … [Trackback]

    […] Info to that Topic: […]

  8. bmo business online banking commented on Jan 28

    … [Trackback]

    […] Find More Info here on that Topic: […]

  9. Digital Transformation Solutions commented on Feb 05

    … [Trackback]

    […] There you will find 85311 additional Info on that Topic: […]

  10. DevOps Service Provider commented on Feb 07

    … [Trackback]

    […] Find More here on that Topic: […]