The relative performance of small caps bounced sharply beginning on October 10th, but that streak looks to be ending. As we can see from the chart below, the performance of the Russell 2000 relative to the S&P 500 moved back up to its downward sloping trendline that began in March of this year and was then turned lower beginning last Thursday. Today alone the S&P 500 was down 73bps while the Russell 2000 lost 144bps.
We also remind readers that from a nominal price perspective the Russell 2000 completed a head & shoulders pattern (regarded by technicians as a bearish signal) at the beginning of October, which we highlighted here. The Russell has rallied right back into major resistance so the action over the next several days will be telling.