The markets continue to be all over the place. The headline indices continue to remain close to new highs, yet under the surface the broader indices are showing a different position.
Below is the FTSE100, the headline index in the UK, the mid-cap FTSE250 and the AIM All-Share. As you can see, the differences are striking.
Here we have the comparison between the Dow and the Russell 2000. Again, there is a clear difference in the market action on recent weeks.
I was still at school in 1987, and can't recall even knowing of the stock market or of trading until I saw something on the TV about the October crash. Consider the words of Jim Rogers about that period:
"If you check, you will see that, during 1987, while the S&P and the Dow were going up, the rest of the market was quietly eroding away. In December 1986, I shorted the financial stocks, and throughout 1987, I didn't lose any money, even though the Dow and the S&P were going through the roof." - Jim Rogers, from his Market Wizards interview.
Now, I am not for a moment suggesting that we have an impending crash on our hands. But there appears to be the potential for a similar split occurring in what the headline indices are doing, and what the rest of the market is doing.