The Race is on between the Nasdaq and Russell 2000

• Posted by Greg Harmon
• on May 9th, 2017

History may be in the making. Not just the Cavaliers sweeping their way into the NBA Conference Finals. Not just the Indians about to go on a strong run. And not just the all-time highs being seen almost daily in stock markets around the world. I am talking about an event that has happened just twice over the last 17 years. Are you excited?

As of the close of the market Monday the Nasdaq 100 ETF ($QQQ) is within 1 point of the Russell 2000 ETF ($IWM). I already see those of you that look at market valuations shaking your head. But take a look at the chart below. It shows the difference between the QQQ and IWM prices over the last 10 years. Over that time period the QQQ has traded at a higher price than the IWM for a brief time from January to February of 2016. And what was happening then? that was a major market bottom. The only other time that the QQQ has traded higher than the IWM as when it was first issued, in 2000 into 2001 as the Nasdaq was falling fast.

The QQQ looks set on a path to overtake the IWM in the near term. The chart shows that it has stalled when the difference hit the top of the Bollinger Bands® in the past, the last time in October 2016 and bounced when it reached the bottom of the Bands. This move higher is running well within the Bands which are open and pointing higher. Momentum also shows some room to move higher.

There may be no significance to this occurrence. For instance both the Nasdaq and Russell 2000 are up significantly since the last top in October and the February 2016 top. Unless of course you are trading the pair against each other. But keep an eye here as history is in the making. If it happens I am sure that many will find something significant about it to write and talk about.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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