Small cap stocks have been on a tear lately. When they broke out above the 86.8 previous high late in 2012 I called this, “the most bullish chart I’m watching.” Just over a year and 35% later things have changed. There are a lot of signs on this weekly chart now that suggest these little guys are just getting tuckered out:

  • A 9-13-9 DeMark Sequential sell signal was triggered late last year.
  • A standard Fibonacci extension projects a top around 119, essentially right here right now.
  • Money Flow is diverging from the new highs in price just as it did prior to the 2011 selloff.
  • MACD histograms representing upward momentum have diverged from the new price highs for some time.
  • Valuations have reached levels that have marked prior peaks for the index.

After the epic run they’ve had, can you blame ’em?