Chart of the Day - Thursday, April 6th, 2023

Today’s Chart of the Day was shared by Charlie Bilello (@charliebilello). It's a ratio chart of the Small Cap Russell 2000 vs. the Large Cap S&P 500 ($IWM/$SPY). Charlie points out that the Russell 2000 is testing its pandemic lows on a relative basis. It's also testing a fragile level on an absolute basis. In other words, the Russell 2000 is at a potential inflection point on both an absolute and relative basis. It would make sense for the Russell 2000 to rebound off these levels, but if it fails to do so, it will be a major red flag, as Small Cap underperformance is a sign of risk aversion among market participants.