This has to be one of the world's most important trends right now. How could it not be?
You hear all this nonsense about the S&P493 and how it's only 7 stocks going up.
But those are just lies. That's not how the market works, and that is certainly not what's been happening this year.
The real trend here is in the outperformance of the largest companies, particularly mega-cap growth, relative to other indexes with more diversified sector exposure and market-caps.
This is the Nasdaq100 making new all-time highs relative to the much broader Russell3000 Index:
Sellers have a hold on equity markets as internal weakness expands and downside momentum picks up.
When looking for evidence of additional downside risk, some of the most valuable information we have is in the price action of the weakest areas. The rationale is that they should break down first and lead the rest of the market lower.
With how poorly the smallest stocks have performed this year, the Russell Microcap Index $IWC is the perfect signpost to help us determine the next move for stocks.
The chart below shows IWC resolving to the downside from a descending triangle formation. It just closed at its lowest level in roughly three years.