Tuesday, May 07, 2013

Daily Market Commentary: Small Caps Gain

After pushing a breakout yesterday, today saw the Russell 2000 build on this momentum.  The advance helped push its relative advance against the Nasdaq, but it will take a number of days before the broader trend in relative strength changes.


The S&P kept things ticking over without undue stress. Volume climbed to register an accumulation day; this is the sixth accumulation day since the last distribution day.


The Nasdaq also enjoyed an accumulation day. The move past resistance is a little precarious and the first sign of selling will likely leave a 'bull trap', but it can be used as a high end trailing stop to lock in profits.


Based on my investing strategy, the market reached an overbought state and is trading at a level better suited to profit taking, or income generation through covered calls, than buying.  This is also a good time to unload underperforming stocks, because when markets start selling off, these stocks will be hit hardest.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.

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