The Russell 2000 has shown none of the recent enthusiasm that has enabled the Dow to post a new all-time high and is still confined within a narrow range that extends back to the May correction.
The Nasdaq 100 was the principal casualty in yesterday’s trading as it dropped 1.3%. Some big name high tech stocks added for Q3 portfolio cosmetics were discarded as we moved into the new quarter.
The lack of movement in the smaller capitalization issues reflects the transformation in the overall complexion of the market since the May correction as the leadership and momentum have notably shifted away from the Russell 2000 towards the larger cap stocks.
BBH, one of the exchange traded funds that tracks the bitoech sector, enjoyed a strong rally that broke it above the trading range that extends back to early April.
There are signs of market dissonance as some stocks favored by major fund managers are displaying potential breakout patterns, but also beginning to look over-extended, while many other stocks look to be entering corrective patterns.
The banking index has rallied back to close just above the May levels and invalidated the pattern that presented itself in early August of a possible lower high for the sector.
Treasury market traders reacted decisively Thursday to the weakness revealed in the Philadelphia Fed survey, slicing eight basis points from the yield on the 10-year note.
The lack of any surprises connected with the FOMC announcement provided the excuse that traders have been looking for to rally the S&P 500 back to the May high.
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