Monday, April 25, 2016

Late Buying Helps Large Caps. Small Caps Vulnerable

No great damage done today, but a little disappointing not to see Small Caps benefit from the late buying enjoyed by Large Cap indices. What is happening though is a gradual flattening in the technical picture, making it harder for traders to look to technical parameters for guidance.

The S&P finished near the day's high, although slightly down on yesterday's close.  Relative performance continues to lag Small Caps despite the better performance today.


The picture for the Nasdaq didn't change from Friday in what was a virtual carbon copy session. Technicals show weakness in On-Balance-Volume and MACD and this will leave bulls nervous.  However, bulls do have the benefit of 200-day MA and fast approaching 50-day MA to lean on.


The Russell 2000 finished with a (bearish) inside day. It's still hugging resistance and a breakout could still emerge tomorrow. Should this happen, look for a surge of buying from short covering (me included!). I'm continuing to watch Rate-of-Change as it maintains a 'bearish' stance. Bulls will look to the continued relative out-performance to its peers.


What was true for Friday is true for today. Bulls will want Large Caps to push to all-time highs to negate what is increasingly looking like another leg down for Tech and Small Caps.

You've now read my opinion, next read Douglas' and Jani's.

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Dr. Declan Fallon is the Senior Market Technician for ChartDNA.com, and Product Development Manager for FirstDerivatives.com. I also trade on eToro and can be copied for free.

 
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