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When comparing the $RUT to the $SPX on a perf chart, seeking to identify if small caps are leading, what do you suggest as the most relevant timeframe?


  • markdmarkd mod
    edited April 2017
    Hi @brucefleet , I would think the answer depends on your investment or trading time frame - so the longer your horizon, the the more relevant the longer time frame. But, I don't use perfcharts, so maybe some one else has a better answer.

    If I could make a suggestion, I keep daily charts of SPY, IWR and IJR with Price Performance indicators (RS) enhanced by a 63 MA (idea to use the 63 MA from @BobS ).

    For SPY, the RS is vs TLT, so SPY:TLT. A crossover from below to above the MA would suggest moving from bonds to stocks.

    For IWR and IWJ, the RS is vs. $SPX (or SPY), so IWR:$SPX and IJR:$SPX. Likewise, the RS line crossing above the MA suggests IWR or IJR stocks are outperforming, while crossing below suggests the opposite.

    The benefit of this method is you get a pretty clear signal. You could try it out in other time frames and different MAs as well.

    You might also add QQQ:$SPX. The technology weighting in the NASDAQ means it does not necessarily behave in tandem with IWR or IJR.
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