Daily Market Commentary: Small Caps Breakout

Bulls kept things moving, although in my sectorbreadth analysis, the once strong Utility sector took a big hit to fall to (joint) last spot.  The Russell 2000 finally posted its breakout. This didn't really change the relative underperformance of the index to the Nasdaq, but there was a gain against the S&P.  However, it did manage to reverse the brief 'Death Cross'.

Friday's gap gain in the Nasdaq was maintained, although there was a big drop in volume with today's buying. Exhaustion gaps are the risk at this juncture, especially with breadth metrics like Nasdaq Bullish Percents near overbought conditions.

The S&P remains firm inside its rising channel. Although the breakout is a more advanced line in the sand to judge whether bulls or bears control it - bulls have it at the moment.

The semiconductor index continues its support of the Nasdaq and Nasdaq 100, helped by its outperformance against the Nasdaq 100. The 'Golden Cross' knocked out the earlier 'Death Cross'. All of which keeps the Tech indices rolling. 

For Tuesday, watch for a 'bear trap' in the Russell 2000, and confirmation of exhaustion gaps in the Nasdaq, Nasdaq 100 and Semiconductor index.


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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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