Curious Non – Confirmation

On 09/27/22 within the time window for a possible lunar turn signal, the S&P 500 (SPX) marginally broke below its 06/17/22 bottom.  The SPX breakthrough was the second of the three main US stock indices to make a new bear market low – a bearish confirming signal.

However, the Nasdaq Composite (IXIC) did not make a new bear market low.  This  is curious  because during the bear market the IXIC was the weakest of the three main indices, falling 34.70% from November 2021 to June 2022.  The SPX fell only 24.50% from January 2022 to June 2022.  The Dow Jones Industrial Average fell 21.50%.

This discrepancy cast doubt on the bearish confirmation signal.  You would expect what was the weakest of the three main  indices to be leading the way down.

Even more curious is the action of the Russell 2000 (RUT) the small cap stock index.

The daily RUT chart courtesy of Trading View illustrates the action.

The RUT fell 33.10% from November 2021 To June 2022.  These are small companies and should be very sensitive to adverse economic conditions. This index should be down much more than the large cap stock indices.  Why is it not leading the way down?

It’s too soon to declare a double bottom is  in place vs. the June bottoms.  Let’s see what the bears can do on 09/29/22. 

Published by Mark Rivest

Independent investment advisor, trader, and writer. Articles have appeared on Technical Analysis of Stocks and Commodities , Traders.com Advantage, Futuresmag.com, and Finance Magnates.

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