This bull market in U.S. stocks is aging. How much more life is left in it?

That is the key question. Here is an indicator with a good record to answer that question. Let’s explore with a chart.

The chart

Please click here for an annotated chart of the iShares Russell 2000 ETF IWM.  A similar conclusion can be drawn from a chart of the Russell 2000 Index RUT.  Please note the following from the chart:

• Small-cap stocks have broken out to a new all-time high.

• This is happening when major indexes such as the Dow Jones Industrial Average DJIA,   and S&P 500 SPX,   are below their highs.

• The Russell 2000 has made higher lows, as shown on the chart. This is a positive.

• The RSI (relative strength index) pattern shown on the chart supports the breakout.

• The breakout is on low volume. That is a negative.

• A shallow pullback from this level will not negate the positive implications of this breakout.

End of the bull market

Near the end of the bull market, large-cap stocks perform much better than small-cap stocks. The reason is rather simple. In a bear market, large-cap stocks lose less money than small-cap stocks do. In a deep bear market, small-cap stocks that are darlings of the bull market can be decimated. For this reason, the “smart money” (professional investors) tends to pull out of small-caps when they see the bull market potentially ending.

Today the smart money is pouring money into small-cap stocks. The implication is that this bull market has further to go.


Investors should not rely on any one indicator or any one form of analysis. Investors are well-advised to rely on a sophisticated model that is comprehensive and has a proven track record over both bull and bear markets…Read more at MarketWatch.

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