Note the weakness in the Cumulative Tick
The small caps did not attract money, but are not breaking down here.
The small caps are still underperforming. Not the best place to short the small caps here: in the current low volatility environment, the best is to short when the IWM/SPY ratio pushes up through its envelope and to buy the small caps when the IWM/SPY ratio pushes below its envelope.
You will note below that the IWM envelope size has decreased when measured on a short-term period compared to a longer-term period. On a 200 days base, the Envelope size of 1.2% is about the same as the S&P500 envelope size on a 500 days base. Volatility is suppressed by a long only investing activity.
Note below the negative divergences in the futures. Traders tell us "this is as far as it gets".
The Russell 2000 is the only one showing a small positive divergence.
Note also that the QQQ displays a similar divergence, while the SPY EV pattern still looks positive.
The ratio of days until a short signal is still below 50%, with the number of days close to 0. In terms of Money Flow, this market has lost all its momentum. It is only supported by the NQ8 sector.
The US/Japan rates differentials also point sought now, with money coming into the Yen.
Some 10Y Treasuries investors started selling though (Equities positive.)
On the energy front, oil continues pushing higher, while the XLE Money Flow displays a negative divergence.
Conclusions:
The NQ8 are still leading the markets, but it is now clear that there is much underlying market weakness.
I believe that we are close to a pull-back here.
