Still long S&P 500 and short Russell 2000 through the futures market.
I keep a daily chart in Excel going back to 1987. Large-cap stocks peaked, relative to small-cap stocks in April 1999.
Small-cap stocks peaked, seven years later on 4/19/2006. So they had a seven-year run, which is typical.
The chart (RUT/SPX) has a head-and-shoulders formation going back to June 2005. The left shoulder is at about 0.54; the head, 0.59; the right shoulder, 0.56. So I expect the ratio to reach 0.51 in the coming months. The current reading is 0.5285, so RUT should under perform the S&P 500 another three or four percentage points over the next several months.
There is also a neat triangle going back to August 2007. The RUT/SPX ratio broke out to the downside last week.
RUT versus SPX
Started by
89S10
, Nov 02 2007 03:41 PM
2 replies to this topic
#2
Mr Dev
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Posted 02 November 2007 - 08:05 PM
you may be interested to know I have a long term sell on the RUT.
So check your ratio chart on the higher time frames as well.
.. .. ..
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#3
ogm
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Posted 02 November 2007 - 09:29 PM
Agree, Mr Dev.
RUT is hanging by a thread at the support here, but momentum is broken and pressuring down.
To be honest the whole market is hanging by a thread, , though NDX is the strongest and RUT and SPX are the weakest.
I don't think we can avoid further declines with this setup. If we don't break some supports within the next week or 2 that would be a TA miracle. 
