Small Caps Head Higher Against Large Caps

My post this week for TraderPlanet this week takes a look at the relationship between small caps ($IWM) and large cap stocks ($SPY).

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)

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

About Andrew Thrasher, CMT

Andrew Thrasher, CMT is a Portfolio Manager for an asset management firm in Central Indiana. He specializes and writes about technical analysis as well as macro economic developments.