Market index divergence last 3 days

2021년 11월 20일

The past 3 days in particular have been quite divergent among the big four indexes. The past month the only spot I can see where this happened was on Nov 3rd, and it quickly ironed itself out within a day. This one is at 3 days and counting. Healthy markets shouldn't have sustained divergences like this. A day here or there, fine, but this one is worth monitoring. QQQ and SPY doing well, IWM and DIA getting spanked.

2021년 11월 20일

노트

It's worth noting that the Advance/Decline ratio was really bad as well. It seems all the lemmings are herding themselves back into the megacaps, at the expense of the Russell 2000.

2021년 12월 21일

노트

The point of divergences is to show that something isn't right, and one can clearly see how this index divergence has played out a month later. While the indexes are no longer divergent, they've all fallen considerably.

The divergence between QQQ and IWM in particular illustrated a breakdown in market breadth. The small caps were getting hurt prior to QQQ...which is very top heavy in market capitalization. Since the Russell 2000 is a much better barometer of overall market health, it wasn't at all surprising to see that the underlying problems eventually spilled over into the other indexes.