Taking a look at the RUT internals may provide additional insights into the health of this broad group of small cap US common stocks.
First, the simple RUT component cumulative AD line. This basic small cap liquidity tool is suggesting broad based willingness to commit money to the small caps is not as strong, both short and intermediate term, as has been during price rallies over the past couple of years.
The RUT component AD McClellan Summation Index (McSum) managed to exceed the important +500 levels from the summer 2006 lows, but is beginning to diverge short term (at a minimum). The key for the RUT intermediate term fortunes would be the RUT AD McSum remaining above its early November 2006 low of around +450. It would be preferable for the bullish case to see the RUT AD McSum find support around +500, but at its current level of +558, cannot afford too many more days with its McClellan Oscillator (MCO) below zero.
The RUT component up-down (UD) volume line has failed thus far to exceed its spring 2006 highs, negatively diverging with the RUT new price highs.
Although RUT's traditional cumulative UD line has diverged negatively with price, the RUT cumulative $weighted up-down volume ($UD) line has done its usual yoeman's job of leading prices to higher highs.
The RUT cumulative $UD volume line's usefulness is more for confirming and leading prices to new highs, and does not usually diverge with price at intermediate term price highs, as a quick look at the indicator over the past two or three years confirms.
The $UD volume is based upon the product of each component's volume and price, thus filters out the impact of very low price-high volume issues which have less impact in actual dollar flows in and out of the market.
The RUT component $UD McSum has posted its first negative divergence with price since the summer 2006 lows. This tool normally tops out before price, so unless renewed strength can be gathered by the RUT $UD McSum very soon, the first warning shot of an intermediate term price high probability increase would have been triggered. Usually, there is a lower McSum high and higher price high in place before a price decline of more than 6% or 7% unfolds in RUT.
However, this indicator has been known to not give a lot of advance warning prior to trouble for RUT price.
On balance, the internals data discussed above, plus some other experimental work in progress using RUT internals data, is suggesting a price decline is imminent in the shorter term in the worst case (for the bulls), or an intermediate term price high is coming in the next few weeks (better case for the RUT bulls).
Having problems posting a chart of some experimental work using another variant of component price and volume data, but that work is suggesting a rather nasty RUT shake out (several percentage points) for the bulls in the next several days, we'll see how that one works out.. no indicator is perfect.