Here’s a piece:
A great example of this was in early 2013 as the chart below shows. We saw IWM outperforming SPY as the green line rose for the first three months of the year. However as the RSI indicator shows in the top panel, there was a divergence taking place in momentum. We eventually saw a slight correction in March and April with SPY strong-arming its small cap colleague as RSI broke through support around the same time the ratio between IWM and SPY broke its rising trend line.
Read the rest: Small Caps Head Higher Against Large Caps (TraderPlanet)
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