I like ratio charts because sometimes they help you to identify important inflection points that you can not see on individual price charts.
About 3 weeks ago, I posted an article on several ratio charts and suggested that small caps should start showing relative weakness and such weakness usually coincides with an overall market sell off.
Divergences and Intermarket Relations are giving the same message
Those charts look like this now:
Since the article, the market dropped a lot but more importantly small caps dropped significantly. Also the negative divergence between SP500 and SP500 Equal Weight Index got worse.
Today I want to show another ratio chart that works just like RUT/SPX and RUT/DJI ratios. One of the largest sectors weighted in SP500 is banks. When BKX (Bank index) reverses down, it drags the entire market down more or less.
SPX vs BKX/SPX ratio