Strong Dow, Weak Russell: What Next?

Yesterday's market was unusual in that the Dow (DIA) was up more than half a percent, but the Russell 2000 (IWM) was down more than half a percent. Since March, 2003 (N = 788), that has only occurred once. In fact, we've only had six occasions in which the Dow has been up more than .30% in a single day when the Russell has been down by -.30 or more on that same day. FWIW with such a small sample, the Dow was down the next day on four of those six occasions, but by three days out was up on five of the occasions.

When we widen out the parameters and look at occasions when the Dow was up by more than .10%, but the Russell down by more than -.10% (N = 45), the next day in the Dow is also bearish, with an average loss of -.19% (18 up, 27 down). That is much weaker than the average Dow daily gain of .05% (429 up, 359 down).