Small & Mid Caps break support at the same time! Bearish signal?

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The Russell 2000 & Mid-Cap 400 happened to bottom together in the fall of 2008, ahead of the S&P 500, sending a bullish signal to the broad markets.

Turning the page forward, they both started started reflecting weakness earlier this year after they both hit respective Fibonacci 161% Fibonacci extension levels. Both have been diverging against the S&P 500 for the past few months.

Currently both are making an attempt to break support drawn off the lowest of lows, starting at the 2009 lows.

Both look to have created rather large bearish rising wedges. The positive divergence was a bullish sign in late 2008. Watch to see if the bearish divergence over the past 6 months is a bearish signal for the broad markets.

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Energy- Worst performer over 90 days is on channel support

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Do you like to buy low and sell higher? XLE is the worst performing S&P 500 sector over the past 30 & 90 days. This decline has taken it down to support of this rising channel, that has been in place since late 2012.

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Bill Gross & Pimco fund sending kiss good-bye message?

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In the late 1990's and 2007 the Pimco High Yield fund (PHDAX) formed bearish rising wedges. Once support broke the fund rallied to kiss the underside of the wedge and its 200MA at each (1), then it proceeded to fall a large percentage in price.

Both times this took place the broad market soon followed the price action of the fund. Were these important "kiss good-bye" messages being sent from the junk bond arena? In hindsight it appears they were.

At this time the fund of late looks to be creating a similar pattern, as it recently kissed the underside of the bearish rising wedge and its 200MA at (2) above.

Bill Gross announced that he was leaving Pimco this morning, is this fund suggesting that investors do the same and exit some broad market holdings due to this price action of late?

In my opinion, the fund's price action has NOT sent an all-out bearish signal to the broad market at this time as the S&P 500 is just 2% off all-time highs. If we see further weakness from this complex the message would be one I will respect.

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