Small Caps confirm support with test

A bit of a mixed bag with the Russell 2000, having enjoyed prior strength, now finds itself in the process of back testing support - with the $229 level key.  Volume rallied to mark distribution to go with a relative underperformance to the Nasdaq.  Strength in the Russell 2000 is key for the broader averages but we need to see a bounce here if we are not to see a return to the prior trading range (of March-May).

The Nasdaq edged a little higher as it rides along former support turned resistance. Just as the Russell 2000 is at a decision stage, so is the Nasdaq where a strong gain will have the dual benefit of clearing both boundary resistance and negate the April 'bull trap'


The S&P edged a breakout on higher volume accumulation with technicals in good shape. The contrast between the gain in Large Caps, and the loss in Small Caps, helped reverse some of the relative underpeformance versus the Russell 2000 - but not enough to trigger a 'buy' signal. 


With traders buying into defensive Large Caps we may be seeing some hesitancy to push growth stocks (Russell 2000) to new highs. However, this looks like a temporary pause and growth stocks will again take a leadership role in this rally. 

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

Share on StockTwits

---

Accepting KIVA gift certificates to help support the work on this blog. All certificates gifted are converted into loans for those who need the help more.

Follow Me on Twitter


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

.

Popular posts from this blog

S&P "Bull Trap"?

Image
I thought there was sufficient evidence to argue against a "bull trap" in the S&P, but it would appear the market wasn't interested in such thoughts and sellers were quick to reverse the initial push above 4,200.  Adding to the pain were new 'sell' triggers in MACD and On-Balance-Volume, although the former occurred above the 'bullish' zero line, making it a weak signal. Selling volume ranked as distribution as selling momentum picked up speed.  The index is also underperforming relative to the Russell 2000. 
Read more

"Black Candlesticks" are a concern for the S&P and Nasdaq

Image
A bright start for bulls on the back of positive $NVDA earnings wasn't enough to generate a day of meaningful gains.  However, it did help stall the losses of the last couple of days. The Nasdaq was the biggest beneficiary of today's action, but not enough to see an end-of-day finish that cleared last week's swing high, nor delivery of a large white candlestick, despite the morning breakout gap.  Technicals are net bullish and relative performance against the S&P has become consistently stronger since the start of May.  While today's candlestick I would view as typically 'bearish', today's volume ranked as confirmed accumulation (bullish). Overall, I would be looking for higher prices from here. 
Read more

Round 2 for the bearish "black" candlestick in S&P and Nasdaq

Image
The Nasdaq started brightly but ended up closing below its open price, but above yesterday's close. The S&P did something similar, although the intraday range is narrower. These two setups are somewhat complicated by the new 'buy' triggers in On-Balance-Volume for both the Nasdaq and S&P. And the new MACD trigger 'buy' for the S&P. Price action is key, so I would expect the candlestick to trump the technical picture; watch for lower prices tomorrow.
Read more

Archive

Show more