Dow poised to breakout, Russell 2000 not far behind, S&P and Nasdaq gain ground.
Markets edge towards a breakout in another day of buying. Buying volume was down on Thursday, but indices are only a day or two away from significant breakouts.
The Russell 2000 ($IWM) had made strong gains in relative performance since the middle of December and ticked nicely higher on Friday. The target breakout price is $188.70, although expect some pause at this price as the rally has gone six days without any give back.
The Dow Jones Industrial looked ready to breakout on Friday, but it didn't quite get there. Technicals are net positive - although the index continues to underperform the Technology. Monday would be a good time to see it happen.
It's still a bit of a slow burn for the Nasdaq and S&P. The Nasdaq has managed to get itself above its 50-day MA, but remains some way from challenging its 200-day MA. Technicals are net positive and the index is outperforming Large Cap indices.
The S&P will need a few more days (or weeks) before it can challenge December highs, but it did manage to close above its 200-day MA. The sharp underpeformance against the Russell 2000 is the concern - at least for this index (not so for the Russell 2000). I would rate this the accumulator index with traders focusing on the Dow or Russell.
Breakout traders will keep focus on the Dow Jones Industrial Average, but the real winner could be the Russell 2000 ($IWM). I would be happier to see gains in the Russell 2000 as it would mark a return to more speculative investing. Overall technicals are much improved, leaving bears with much to do if they are to break this.
Get a 50% discount on my Roth IRA with a 14-day free trial. Use coupon code fallondpicks at Get My Trades to get the discount.
---
Investments are held in a pension fund on a buy-and-hold strategy.
