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Daily Chart of Three Indices

Looking at above charts, which one looks the strongest? The first chart set a new high yesterday, the second one came close, and the third one lags miserably. Chart #1 is well above the 50 and 200-dma, and the two are getting ready to cross. Chart #2 looks similar, but chart #3 hasn't even broken the 200-dma yet.

Looking back, the green lines show us that chart #1 managed to set a new high in January, #2 fell short, and #3 plummeted. When the February sell off hit, #3 took the biggest hit, but #1 just dipped below some previous lows.

#1 fell the least, and has risen the most, so what is it? #1 is the S&P SmallCap 600 Index (SML.X), #2 is the S&P 400 MidCap Index (MID.X), and #3 is the S&P 500 (SPX.X). Small caps have been kicking the large caps butt lately, but how did they do against the Nasdaq?

Relative Strength Comparison of SML.X and COMPX

Small caps have also been outperforming the Nasdaq Composite, but that trend looks like it could be coming to an end. The April rally in the Nasdaq dropped relative strength right down to the trend line, but was able to hold. Yesterday's rally finally broke the trend of small caps outperforming technology, at least for now.

Jeffrey Canavan
Assistant Analyst

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