Technical Analysis Should Always Follow the Money

The rotation or relative strength within the market that defines its strength or weakness.

When the advance or decline is broad (the troops lead the army), as opposed to narrow participation (the generals lead), the move is robust. Never fight the direction of the troops.

Small cap stocks continue to lead the stock market.

Russell 2000 to S&P 500 Ratio:


Follow the production. The relative weakness that has persisted in China since August of 2009 has generated a technical turn signal.

China to S&P 500:


Money always follows the path of least resistance.