|Everything you see on those charts, I mean everything, is based upon the work of people a lot smarter than I am. Over the years just about every expectation that I have ever had for a stock or the market has proven wrong just as often as right.|
That said I basically agree with what you said except....
If we had seen a true market bottom, after a normal bear market a few weeks back, then yes I would expect small caps to lead starting a new bull market.
These are not normal circumstances. I'm not talking about Covid-19 which is a real world problem resulting in very real deaths as you know as well as anyone.
No I am talking about the Fed. I am talking about our Federal government doing whatever it can to keep not the economy but the stock market from a total meltdown.
That interference in normal market cycles has made it impossible to expect normal stock market.
The money that has been printed the last twenty years with no effort made to balance the Federal budget is truly astonishing. The punch bowl never empties. Normal market cycles are not allowed to happen.
That said we have already seen some very good things for the market.
Terrible sentiment at or just after the March Bottom. A couple weeks with more bears than bulls in the Investors Intelligence Poll. Of course that can happen a lot in a normal bear market.
The next really positive sign was 90% upside days for the NYSE. I didn't see that for the NASDAQ so yes small caps did not rally as much.
But the biggest missing element to me that would say the market had bottomed would have been an up volume day for all meaningful indexes that was higher than the previous days downward volume. That should have been followed by a higher volume upside week than the previous week's downside volume. Finally the monthly chart for April should have had higher upside volume than March's down volume.
If we get that later this summer or maybe fall then it could happen at levels that at least test the March lows. Look back at 2009 on this NASDAQ chart for an example:
PS Keep an eye on the SOX because it's more indicative of market direction than just about any other indicator.