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“I always believe that prices move first and fundamentals come second.” – Paul Tudor Jones
US equity futures are in the red again this morning with SPY down 40 basis points in pre-market trading. We’re beginning to sense a pattern here…
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As shown below, large-cap index ETFs like DIA, QQQ, and SPY are quickly nearing their 50-day moving averages after declines from record highs this week. The Russell Mid-Cap ETF (IWR) already broke below its 50-DMA earlier in the week, and of course, the Russell 2,000 Small-Cap ETF (IWM) has been below its 50-DMA for the last month or so.
Small-caps have been incredibly weak this summer relative to the rest of the market. After yesterday’s drop, the Russell 2,000 is now down 9.65% from its record high made on the Ides of March. It will only take another slight move lower to leave the index in official “correction” territory (a 10% drop).
Yesterday’s weakness also caused the Russell 2,000 to break below support at its long-term 200-day moving average.
The close below the 200-DMA ended a streak of 226 consecutive closes above the 200-DMA for the Russell. The just-ended streak is the 11th longest on record dating back to 1978 when the index began.
So what’s next now that this technical breakdown has occurred for small-caps? Find out by reading today’s Morning Lineup. Start a two-week trial to Bespoke Premium and read today’s full Morning Lineup.