If You Like it Then You Should Put a Ring on It

The small caps in the Russell 2000 Index continue to be a drag on the action, again leading the market lower this morning. 

We have been tracking the "diamond" consolidation, highlighted below on the Russell ETF, as offering good context as to the recent price action and the underperformance versus the Nasdaq, S&P, and even the Dow. The diamond is signified by wild price swings and overall confusion on the part of market players. 

Diamond patterns can often signal bearish continuation, which is of course at odds with the gap higher the Nasdaq saw late-last week to culminate the bounce since late-September. I doubt we see full-blown confirmation of a breakdown or false breakdown before the FOMC tomorrow afternoon.

But, clearly, the diamond is very much in play. And if the bulls like small caps so much, then they should put a ring on them sooner than later.