Can Small Caps Break Out?
09/29/2010 9:47 am EST
In early September, the S&P 600 (small cap index) and S&P 400 (mid cap index) were diverging as the S&P 400 was showing better relative strength (RS). The RS line on the S&P 400 has just broken out to the upside. The index has also surpassed the June-to-July highs while the S&P 600 has not yet moved above its summer resistance. For the S&P 600, the downtrend in the RS has just been broken, suggesting that it may be ready to start outperforming the S&P 500. Both indices are above their 200-day moving averages.
Tom Aspray, professional trader and analyst, serves as video content editor for MoneyShow.com. The views expressed here are his own.