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Russell Stock Index A leading Indicator



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Since late July, the Russell 2000 has moved by more than 1% on 10 out 
of 13 trading days, and in the past nine sessions alone, the small-stock 
index has moved more on a percentage basis than either the DJ or the S&P
500 on 
seven occasions, the Wall Street Journal will say today.  It will also note 
that "the Russell 2000 index of small-company stocks rode up 7.33, or 
1.81%, to 411.29, but the barometer remains the only major stock-market index 
that is in negative territory for the year, down about 6%. The Nasdaq 
Composite Index jumped 37.08, or 2.04%, to 1855.12 .... in the past 30
trading 
days the Russell 2000 has moved, on average, 1.3% per day, up from a 
600-day average of 0.61%, according to data compiled by Schroder & Co. That
compares with an average daily move of 1.2% in the S&P index of 500
blue-chip stocks, which has a 600-day average of 0.7%."  The standard
deviation of the Russell 2000 hit a six-year high this past week, on 
an annualized basis, says ITG Inc., a New York brokerage firm. The
Russell's volatility also moved higher than the S&P 500's for the 
first time since September 1996. Part of it has to do with uncertainty
about earnings. According to 
the WSJ,in the second quarter, the Russell 2000's average earnings surprise 
was 3% below expectations. whereas First Call reports stocks in the Standard 
& Poor's 500-stock index reported earnings 1.8% above expectations. 


I was told by a guy who said the Russell leads the Dow and S&P. He said he
has been making money with options on stocks for a number of years watching
this relationship. He sent the above post where he got it I have no clue
but interesting theory.

Robert