Hubert Senters here.
Got a question from Karl. Karl’s question is in your view why is the Russell 2000 not following the S&P trend? Today right now for example, ES is down – 13 points where as RTY is up +12 pts.
I understand NQ behaving differently but not the ES and RTY. I have noticed this divergence happening a number times in the last two week. Your take on this will be much appreciated.
Thank you. Best regards, Karl C.
Let’s take a look at this. That’s pretty normal in the scheme of like trading markets and stuff like that. If you look at it while I’m doing my scans there’s always new that’s fine the longer you trade , you would see it’s really common. It’s very common for one to lead and what you’re trying to do with the index futures and I just call them the four sisters.
So you got the ES going higher and when I’m comparing the markets there’s always a lead and there’s a lag and it could be for several different reasons. It could be like portfolio rotation, a hedge fund just besides to buy something in the Russell and pops it up or a bunch of people from Robinhood are buying a lot of things on the Nasdaq.
It’s supply and demand issue and remember there’s a note saying on Wall Street like ”oh, more buyers and sellers.” It’s never the cases. The buyers are more aggressive than the sellers. In those particular indexes in those components the buyers are more aggressive or the sellers are more aggressive.
So when you look at this if you look at the ES and just eyeball it really quick and actually you can see it even better if you look at a little bit longer term play. It’s on a weekly chart.
That’s the ES and that’s the Nasdaq. The Nasdaq just stronger so the Nasdaq is the lead. And then you go ok, who’s second? Is it the ES? Is it the Russell? Or is it the Dow? Oh, it’s the ES. So we’re going Nasdaq first so she’s the leader and then S&P is going to be second. And then YM is going to be third. And then the Russell will be fourth.
And that’s just the way it’s shaping at right now. That can change. Like the Russell can take off. And it can be the leader. And then the Nasdaq can be the lag or the Dow can be like. In intraday they’ll wiggle but different ways like sometimes it’s very common for me to see like the Dow go up and the Nasdaq go down.
Or the Nasdaq go up and the Dow go down pretty common intraday. But what we’re looking here is the daily trend to make sure that we know who the lead is and who the lag is. Very common from them all four to be going in the overall direction but one is going to the be leader. And then you can rank two, three and then four is the lag. Hope that helps you out.
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Good luck. Hope it helps. See you on the next video.
Hubert.
