A Major Bell is Ringing… But Investors Are Deaf to Its Warning

They say that they don’t rung a bell at the top.

 

This is incorrect. Tops are almost always marked by clear warnings signs, both from a fundamental and technical analysis standpoint.

 

On that note… we need to point out that the Russell 2000 has lead the S&P 500 to the upside since market began its strong rally at the beginning of 2013:

 

 

This is totally normal. The Russell 2000 usually leads the S&P 500 during periods of “risk on.” But this process also works in reverse with the Russell 2000 usually peaking before the S&P 500 when a major top is formed.

 

Take note, the Russell 2000 has formed a double top:

 

 

Not only has it formed a double top, but it is not diverging sharply to the downside form the S&P 500:

 

 

This is a major warning sign that this latest bounce from the October lows is not to be trusted. The Russell 2000 is a full 9% lower than the S&P 500. If the Russell 2000 doesn’t go absolutely vertical soon, then we are getting a major BELL ringing.

 

Take note and prepare.

 

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Best Regards

Phoenix Capital Research

 

 

 

 




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