Early Enthusiasm Fails To Hold

This will be the last post until my return from holidays on July 22nd.  Today finished with a bit of indecision as indices closed with bearish 'black' candlesticks; there were strong opening gaps but no follow through with afternoon buying. The risk is for a gap down tomorrow, which would leave bearish 'reversal evening stars'.

The biggest gain came from the Nasdaq. The index gapped over 1%, but this gap didn't clear the April high. Volume was reasonable if a little unspectacular. Relative performance against the S&P remained strong.

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Small Caps Maintain Strength

It was another good day for Small Cap stocks as the Russell 2000 added over 1% to bring it into a challenge of the June swing high. Just as the declines of the early part of last week were of lesser significance because of the broader trading range between 1,500 and 1,610; the same is true for Thursday's and Friday's gain. The one aspect which is interesting is the improvement in relative performance against the S&P. With money flowing back into Small Caps, the groundwork for a larger, secular rally is been put into place.

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Russell 2000 Stages Recover

A much needed boost to Small Caps gave value buyers a shot in the arm as the Russell 2000 gained nearly 2%, returning it above 200-day and 50-day MAs. It was an important recovery which wasn't quite mirrored by peer indices, but such indices are in much better shape.

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Small Cap Weakness Spreads

Sellers took a third day of selling out of the Russell 2000 and this weakness made its way to the S&P and Nasdaq. The selling is more problematic for the Russell 2000 because there is a genuine lack of conviction from traders wanting to pick up an index which is trading at a deep discount to its peers.

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