The S&P 500 and Nasdaq 100 remain in good shape, the Russell 2000 remains in bad shape and the S&P MidCap 400 is caught in the middle. I am not going to read too much into relative and absolute weakness in small-caps because the Russell 2000 is always overreacting. We need to focus on the older and more mature S&P 500 when making a broad market assessment.
The charts below show the Russell 2000 and the S&P 500 with the Zigzag indicator set at 20% (pink lines). These lines filter out moves less than 20% by zigging and zagging only when the index moves at least 20%. Note that I do not count the last move in the Zigzag because it is still a work in progress. This is a 100% hindsight indicator.
The first chart shows the Russell 2000 with 23 moves that were 20% or more in the last 20 years, which averages out to at least one per year. There have also been four declines of at least 20% since the 2009 low.
The next chart shows the S&P 500 with 9 moves that were 20% or more in the last 20 years, a lot fewer than the Russell 2000. Note that the last 20+ percent decline was in early 2009 and the S&P 500 has yet to fall more than 20% in the last ten years (closing prices).
As of this writing, the S&P 500 is less than 3% from its all time high, which was in July 2019. The Russell 2000 is around 16% below its all time high, which was way back in August 2018. Small-caps have been dragging their feet for well over a year. Nevertheless, the S&P 500 is still in an uptrend and still close to an all time high.
While small-caps offer more bang for the buck (beta), the S&P 500 is the key index to watch when it comes to the broader market environment. We cannot be in a bear market when this key benchmark is less than 3% from an all time high.