SP v Russell 2000

As this market is moving higher today, the small caps, represented by the Russell 2000 are not over-performing. In my experience as a spreader, when the broader market is moving higher, the Russell 2000 tends to outpace to the upside as traders can get more "bang-for-the-buck" in small caps.  In a situation like today, where the SP's are up 90 bps and the Russ is +100 bps, there is no significant outpacing.  I tend to not have much faith in a broader market move higher, when the riskier trade, buying the small caps, are not leading the way up.  On a similar note, with the SP's down yesterday, the Russ under-performed as traders poo'ed on the small caps, thus pushing the spread higher (see chart below).  I am not a fan of this rally in the broader market and will look to position myself accordingly to profit, lately that means being long US indices and short EU indices.  Please see prior blog posts for explanation of the US vs EU spreads.

Be Blessed

Hemi