Monday, December 13, 2021

Russell 2000 continues to rollover

It was a mixed bag for indices with the Russell 2000 continuing its move towards the December swing low while Large Caps edged higher.  The Nasdaq had a middling Friday, ending the day on a neutral doji despite a higher close. 

In the case of the Russell 2000 the index made a small loss but also finished on a neutral "spinning top" - comparable to the action in the Nasdaq. Technicals are net negative although stochatics moved out of oversold conditions. 

The Nasdaq is next up.  The index end-of-day close was similar to the Russell 2000 in that it closed on a neutral candlestick, with the exception the index finish the day higher.  It remains on course to challenge its 200-day MA. 

The S&P had the best of Friday's action, finishig as it did on a higher close - a close high enough to resume the bouce rally as it looks to challenge the spike high at 4,473.  The recovery has done enough to register as a fresh 'buy' in the MACD, above the bullish zero line, whch is usually a good buy trigger. We will see...

It's hard to reconcile returing strength in the S&P against the continued weakness in the Russell 2000.  Action in the latter index does suggest there is worse to come, but it's possible the S&P will benefit from cyclical rotation into defensive Large Caps - but without participation from Small Caps, any rally for Large Caps will be short lived. 

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

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