Consumer confidence has an interesting relationship with market and exchange traded fund (ETF) performance. We are told consumer confidence is good for stocks and ETFs, says Gary Gordon for ETF Expert. Yet when you start to look a little deeper, consumer confidence tends to have the opposite effect, especially on Nasdaq and small-cap stocks.

If you look at small-cap performance lately, the correlation is there. Both the PowerShares QQQ (QQQQ) and the iShares Russell 2000 Index (IWM) declined steadily starting mid-July. Keep in mind that consumer confidence hit a six-year high mid-July. And IWM has yet to resurface above its trend line. This could be an indicator that the small-cap superb run has ended.

Iwm_qqqq_etf_chart

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.