Watch Those Transports

The oversold condition I discussed Tuesday helped bring the S&P 500 from down to flat, but it's clear all the action was in the small-caps: The Russell 2000 soared more than 1%. The market is still oversold, but let's take a look at the chart of the S&P relative to the Russell, considering the outsized move Tuesday.

As a reminder, when the ratio is high the Russell tends to be at or near a low. When the ratio is low, the Russell tends to be at or near a high. As you can see, the red line on the chart shows this chart has come down quite a way. Should the Russell go back to underperforming, thereby forcing the ratio to tick back up, as it did in early July in March (both circled), it would be bearish for the broad market....376 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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