Small Caps Ready to Pop as Indices Gain

The S&P maintained bullish pressure with a small gain, a gain sufficient to mark a new closing high.  Technicals are generally bullish, although the MACD has flat-lined.

The Nasdaq is similarly trading into a tight congestion and while Friday's finish suggests higher prices ahead I have marked a possible short based on the convergence of support and resistance. A closing break above 8,150 resistance would negate the short.

The Russell 2000 had the best of the action as it pushed a 1% gain off converged 20-day, 50-day and 200-day MAs. The index is nicely primed to gain tomorrow or Tuesday but for this to be sustainable it's going to take a few days of strong buying to reverse the relative underperformance of this index to the Nasdaq and S&P.

The Semiconductor Index had engaged in a reversal but Friday's higher finish relative to the open has offered a stronger picture than might have been expected after the breakout.

For tomorrow, look for Small Caps to lead broader markets higher.

You've now read my opinion, next read Douglas' blog.

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Investments are held in a pension fund on a buy-and-hold strategy.

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