Daily Market Commentary: Small Caps Break

It was looking like bears were going to set the tone for the first day of September, but bulls were able to put a stint in at the end to lessen the damage. Leading the way was the Russell 2000.

Small Caps finished very strongly with a significant shift in relative strength to Small Caps from Tech and Large Caps. The breakout cleared two reaction highs which is good news for other indices looking to break resistance.

In the S&P the index was able to edge a close just above the 20-day MA with a supporting bullish trigger for On-Balance-Volume.  The MACD histogram is coming off a swing low and a couple more days of modest bullishness might be enough to see a larger upside move develop. Holding the 20-day MA looks key.

The Nasdaq was able to mount a defense of its 20-day MA, closing higher with heavier volume accumulation.

With the first day of trading in the bag for September it was a bright start from the key bull market sensitive Small Cap sector. If this move evolves into strong leadership from Small Caps it could be an Indian Summer for markets.


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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. I offer a range of stock trading strategies for global markets which can be Previewed for Free with delayed trade signals. You can also view the top-10 best trading strategies for the US, UK, Europe and Rest-of-the-World in the Trading Strategy Marketplace Leaderboard. The Leaderboard also supports advanced search capability so you can tailor your strategies to suit your individual requirements.

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