One of the hallmarks of trading this yr has been the underperformance of minor caps relative to large caps. As you lot tin run into from the transcend chart, the Russell 2000 Index (IWM) has pretty good underperformed SPY for nigh the year. Recently, however, that human relationship appears to possess got turned around. At the recent marketplace pose lows, nosotros did non run into relative lows for IWM to SPY and, indeed, IWM is trading rattling close its highs for the year. Similarly, microcaps (IWC) are trading at multi-month highs. This is relevant, because it suggests that the recent marketplace pose forcefulness has been broadening inwards its breadth, non narrowing similar recent rallies.
In the middle chart, you lot tin run into that the cumulative NYSE TICK has bounced from recent lows, precisely remains below its highs for the year. When nosotros possess got the cumulative TICK for all U.S. stocks, however–which captures the buying as well as selling of the broadest market–we tin run into inwards the bottom nautical chart that that has moved to novel highs as well as never corrected significantly during the recent weakness.
I volition last watching breadth measures carefully here. Given the expanding relative forcefulness from the smaller caps, this does non seem to last a weakening market–which suggests that the rally should possess got legs.
Further Reading: More About the U.S. TICK