S&P500 is a market capitalization weighted index of the 500 largest companies by market value.
Russell 2000 index is measuring the performance of approximately 2000 small-cap companies.
The current market trend for small-cap obviously outperforms the large-cap. This may be the signaling of the last phase of bull market and the bear may come soon. Usually the beginning of bull market is led by large cap and end of cycle led by small cap. Therefore you should look for uptrend small cap, trade short term and set your stop-loss tighter. Long-term investor are not adviced to enter the market now.
Crude Oil Market
Crude Oil price continues to achieve higher high in uptrend and has been rising 70% since June last year, or up 25% since this February. The recent pressure of 11% correction may due to the worried of OPEC upcoming meeting about to increase production to offset Iranian outages due to U.S. sanctions and the growing of US shale oil production.
OPEC has successful bring back the oil inventory level to 5 years average and expected to continue maintain the balance in demand and supply. The high oil price may move within $65-$75 in next 3 months.
I will still expect oil price to hit $80 this year end with the Middle East geopolitical risk and strong demand from China. But the risk of getting recession is high if crude oil breakout the uptrend channel go parabolic to $100 next year.
Gold Market
Gold is in bullish ascending triangle pattern and expected to break the resistance next year.
Gold serves as a safe haven for investor due to increasing risk of recession like:
- Raising oil price may accelerate inflation which leads to more aggressive interest rate hike.
- Falling of bond price causing 10-Years Bond Yield crossing above 3% critical level recently and may continue to raise.
- The outperform in commodities especially energy sector may signal end of bull market soon.
- U.S. Unemployment Rate is at extremely low rate 3.4% last month, and it is near year 2000 low of 3.3%. Historical shows that recession happen within a year after U.S. Unemployment Rate turning up. Keep your eye on unemployment rate.