Wednesday's selling was tough, but Friday offers hope

"Hope" is a bad word in trading, but markets are holding up better than I expected.  The Russell 2000 is the index to watch because of the import of growth stocks to secular bull markets, but also because it's the index closest to crashing. 

Friday was an important day for the Russell 2000, as the index started with a gap down.  There was significant risk of a collapse, but buyers stepped in and managed to deliver a close above support.  This is key, because Small Caps closed above support as defined by candlestick real bodies. Buying volume was a little light, so no accumulation, but I would be okay if at some point in the coming week we did see some accumulation.  Technicals are net negative, and while Friday's price gain was good, there was no improvement in supporting technicals. 


Tech stocks have had a good week.  There was a double breakout with both declining and horizontal resistance taken out, on improving technicals in the Nasdaq.  Semiconductors have been performing particularly well, and sit on the verge of a significant breakout. and this strength has represented itself in the Nasdaq.  This doesn't look like an index which is about to collapse, and this could spell good news for the struggling Russell 2000. 




The S&P is trading above both declining resistance and its 200-day MA. Technicals are steadily improving, with a new 'buy' trigger in On-Balance-Volume, to go with the earlier 'buy' trigger in the MACD. However, other technicals are negative, and this is reflected in price action that is closer to its most recent low versus the last swing high. However, my expectation would be for higher prices on Monday.


For next week, I would be looking for the Semiconductor Index to drive buying in Tech stocks, which then spread the love to the other indices. My concern is the Russell 2000, which while having a good Friday, would only take one or two days of selling to drop it back into trouble. 

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

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