Leader and Laggard

Today 06/07/23 the Russell 2000 (RUT) composed of small – cap stocks continued the upward surge that began 05/31/23.

The daily RUT chart courtesy of Trading View shows its recent movements.

On 06/07/23 the RUT increased 1.78%.

The 06/07/23 performance of the three main U.S. stock indices is as follows.

Dow Jones Industrial Average +.27%.

S&P 500 – .38%.

Nasdaq Composite -1.75%.

The RUT high on 06/07/23 was just above a Fibonacci .618 retracement of its 02/02/23 to 03/24/23 decline.  The Fibonacci .618 retracement level usually can be an area of support/resistance.  The marginal move above .618 could mean RUT has reached at least a short-term top.

For several weeks the Nasdaq 100 (NDQ) a sub- index of the Nasdaq Composite has been leading the rally that began in mid – October.  On 06/07/23 NDQ declined more than the three main U.S. stock indices.

The daily NDQ chart illustrates its November 2021 to October 2022 bear market and the subsequent rally.

On 06/07/23 NDQ declined 1.78% and failed to exceed its post October 2022 rally high made on 06/02/23.

The NDQ high on 06/02/23 was at an outlier Fibonacci retracement level of .667 or 2/3 of the November 2021 to October 2022 bear move.

The outlier Fibonacci retracement level could be at least a short-term top.

The upward surge of RUT has been  curious because these are not the type of stocks you would expect to be leading a sustained bull market.

Even more curious is the NDQ action since 06/02/23.  This index had been leading the post October rally.  Now NDQ is lagging the broader U.S. stock market.  Or another way to look at NDQ – it could now be leading the way down.