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What do the Small Cap Stocks tell us about the Market?

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Published on May 27, 2016

Whereas new record highs will probably be made by two of the widely watched indices, the DOW INDUSTRIALS and the S&P 500, we prefer to look at the broader indices, like the RUSSELL 2000 which consists of 2000 small cap stocks. The relationship between the price trends and the volume trends is very revealing. This gives the clues.

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Auto generated Transcript by YouTube
Today twenties small-cap stocks everyone knows that the S&P 500 and the Dow Jones Industrials percent and a half of making new record highs which i think is going to happen in fact we've been saying that for several weeks down the agenda is to get everyone excited when these indices go to new high but it's a broader market doing that's much more important the broader market indices that we uses the Russell 2000 small-cap indices are much harder to manipulate than the S&P 500 or the dow jones industrials so take a look at us take a look at the IWM which is det effort Russell 2000 and we'd like to see vol she would volume does when the market goes down so here we take a look at the daily chart and significant here is that the rises in the IWM but it's going up has been accompanied here for the last year or so decline in value in that means fewer and fewer people are willing to Peter prices as the prices rise and then as the index declined we got an actual increase in volume that means more people were interested in selling is the market went down we headed again here in december is the index went up into year end and that's the top of the top dividing declined here we have it again this big decline in January and February the market plunged at that time in the market rose in value and so the rally since february 12 has been accompanied by declining value fewer and fewer people are willing to pay these higher process and now we take a look at it just the rally from last week or so we can see that volume is just plunged so this is important it's not an exact chaining mechanism but definitely shows that valium is now there to support the app this is a strong resistance at the fifteen level and is that is penetrated then we should go to 119 and should be like the market this is predominant wishing you a wonderful holiday weekend and successful trading in the markets

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