RUSSELL 2000 IS TRADING OVER ITS 200-DAY LINE -- A STRONGER DOLLAR MAY BE HELPING -- MAJOR U.S. STOCK INDEXES NEAR THEIR 2018 HIGHS -- CORPORATE BOND ISHARES ARE ALREADY IN NEW HIGH GROUND
RUSSELL 2000 TRADES ABOVE ITS 200-DAY AVERAGE... In the midst of a strong market day, small caps are showing a bigger percentage gain than large caps. Chart 1 shows the Russell 2000 Small Cap Index ($RUT) trading above its (red) 200-day moving average today. The RUT still needs to clear its February/April highs to turn its trend higher. But it's moving in the right direction. The purple line is a relative strength ratio of the RUT divided by the S&P 500. And it's been dropping since February as small caps lagged further behind large cap stocks. But the ratio has reached potential support near its December low and may be starting to bounce. That would be logical chart spot for the ratio to start rising. The RUT may start getting some help from a rising dollar which is hitting another high again today (upper box). Large cap stock indexes have nearly reached last year's highs.
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Chart 1
MAJOR STOCK INDEXES NEAR TEST OF 2018 HIGHS... Chart 2 shows the Nasdaq Composite Index trading just shy of last August's intra-day high of 8133. Chart 3 shows the S&P 500 nearing its all-time intra-day peak at 2940. Chart 4 shows the Dow Industrials nearing their 2018 peak at 27000. Most stock sectors are in the black today with the biggest gains in healthcare, communications, cyclicals, REITs, technology, and industrials. Defensive consumer staples and utilities are lagging behind.
CORPORATE BOND ISHARES HIT NEW HIGHS... In another sign of market confidence, corporate investment grade and high yield bonds continue to follow stocks higher. Chart 5 shows the iBoxx High Yield Corporate Bond iShares (HYG) trading at a new record. The lower box shows iBoxx Investment Grade Corporate Bond iShares (LQD) doing the same.
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Chart 2
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Chart 3
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Chart 4
