A confluence of factors came together this week and stocks started a long awaited corrective process on Friday’s with the day’s performance being the biggest down day so far in 2012. However, our breadth indicators and the price action are still giving us a strong indication that this will be nothing more than a garden variety correction before the uptrend resumes.
Earlier this week I posted a few charts on my blog that seemed to indicate that we were getting closer to this correction (http://equitymaven.blogspot.com/2012/02/little-noticed-new-post-crash-high-was.html). And just as the Russell 2000 started to show relative weakness to the S&P 500 prior to the correction I suspect that when the Russell 2000 starts to show relative strength to the S&P it will signal that the uptrend will resume.
Have a great week!