Profile image
By ETF Daily News (Reporter)
Contributor profile | More stories
Story Views

Now:
Last Hour:
Last 24 Hours:
Total:

Small Caps’ Volatility Diverges From Price: Which Will Blink First?

Friday, March 17, 2017 3:33
% of readers think this story is Fact. Add your two cents.

(Before It's News)

From Dana Lyons: Though the Russell 2000 is off its highs, its volatility expectations are hitting 52-week lows; which is correct?

A couple times in recent months (here and here), we have written posts pointing out odd behavior between the S&P 500 and the S&P 500 Volatility Index, a.k.a., the VIX. Since stocks and their related volatility indices typically move in opposite directions, it was odd to see the 2 moving in concert, even if it was just in the very short-term. Each time, we asked the question, “who will blink, the S&P 500 or the VIX?” As it turns out, arguably it was the VIX that blinked both times, eventually reversing course to a more conventional path given the direction of the S&P 500.

Today, we ask a similar question regarding the Russell 2000 Small-Cap Index (RUT), and the Russell 2000 Volatility Index (RVX). The impetus behind the question is the unusual set of circumstances currently present in the two data series. Specifically, The RVX recently closed at a 52-week low while the Russell 2000 was more than 2% off of its recent high.

That may not seem all that extraordinary. However, since the inception of the RVX in 2006, it is just the 6th unique time that the RVX has hit a 52-week low while the RUT was at least 1% below its 52-week high.

image

So what is the message being sent here? Judging by the prior events, there appears to be a clear favorite for who is most likely to blink.

See the “all-access” breakdown of this unusual and telling small-cap phenomenon – as well as our complete macro market analysis every day – at our new site, The Lyons Share.

The iShares Russell 2000 Index ETF (NYSE:IWM) fell $0.09 (-0.07%) in premarket trading Friday. Year-to-date, IWM has gained 2.27%, versus a 6.69% rise in the benchmark S&P 500 index during the same period.

IWM currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 28 ETFs in the Small Cap Blend ETFs category.


This article is brought to you courtesy of Dana Lyons, JLFMI and My401kPro.

You are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)



Source: http://etfdailynews.com/2017/03/17/small-caps-volatility-diverges-from-price-which-will-blink-first/

Report abuse

Comments

Your Comments
Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

Top Stories
Recent Stories
 

Featured

 

Top Global

 

Top Alternative

 

Register

Newsletter

Email this story
Email this story

If you really want to ban this commenter, please write down the reason:

If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.