Indies pause in fresh challenge on highs
A bit of a mixed bag on Friday as the Russell 2000 ($IWM) manages to finish the day higher, while both the Nasdaq and S&P close back at the open price, after a day built on promise.
The Russell 2000 is the easiest to comment on, but has the longest way to go before we can consider it back to secular bullish form. Friday's higher close edged back a little on the test of its 20-day MA, although the buying was enough to reverse the 'sell' triggers in On-Balance-Volume and the ADX. However, at this stage of the base building process, a challenge and break of $188 is needed before we can look at what comes next.
Next we have the Nasdaq. It closed with a potentially bearish 'gravestone doji'. What curtails the damage a little is the fact the doji appeared within a mini-base of what still could turn into a double-top; 'gravestone doji' are particularly dangerous when they appear in isolation at the end of a rally as they mark reliable reversals. Technicals are mixed with bearish signals in the MACD and On-Balance-Volume offset by the bullish signals in ADX and Stochatics. The Nasdaq is also outperforming both the S&P and Russell 2000.
The S&P had a similiar experience as the Nasdaq, except the MACD switched back to a 'sell' trigger to go with the sell in On-Balance-Volume. While the S&P is underperforming relative to the Nasdaq, it still has an edge over the Russell 2000 ($IWM).
One interesting development to watch is the Semiconductor Index. While action in the Nasdaq and S&P mirrors each other closely, the Semiconductor Index is shaping a bullish triangle/pennant. Momentum has managed to stay overbought during the development of this pattern, which is typically a good sign for a breakout higher. Lets see if it does.
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