Expanded Russell 2000 Breakout - Nasdaq Ready to Follow

Yesterday saw big gains for the Russell 2000 as it accelerated past breakout support. A large part of this buying was likely driven by short covering but today's defense of those highs is a vote of confidence by buyers who are looking to hold for longer than a few days. The target of 1,560 is the first overbought target to aim for at the 85th percentile rising to 1,637 for the 95th percentile (of historical prices going back to 1987).

Small Caps Take Advantage of Tech Hold Out

It was a day for watching the Nasdaq and Nasdaq 100 but it was the Russell 2000 which took the day's honors. Both the Nasdaq and Nasdaq 100 held on to channel support for another day although it wasn't entirely a decisive defense. Fifty-day MAs are holding but the 'spinning top' candlesticks are a mark of indecisiveness. Volume climbed to register as accumulation.

Can Tech Breakouts Occur From Here?

The squeeze set-up from last week which offered bulls a likely breakout has now fallen back inside the prior consolidation. Bulls now have a decision to make; do they defend the rising channel? Or let prices drift lower and risk a seller capitulation. A channel break at this stage would be very concerning and would open moves to test the June and August swing lows along with the 200-day MA - each a long way from current levels; in addition, a loss of the August swing low would effectively confirm a double-top.

Russell 2000 Hits Its Target

Friday delivered the upside target of 1,450 I was looking for in the Russell 2000. Next will be some follow through in line with the S&P and Dow breakouts, but this will require a resistance break which will be harder than a resistance tag. Technicals are healthy and relative strength is working strongly in Small Caps favour.

Tech Trades Squeeze Stops; Russell 2000 Approaches Resistance

There is a bit of an overreach on today's action as the level of loss was light. However, the much-anticipated breakouts in the Nasdaq and Nasdaq 100 look like they will have to wait a little longer. Both Tech indices saw the squeeze put on tight long stops, but not enough to suggest a panic sell-off is imminent. However, any sell-off has to be watched; losses below the 50-day MA would be concerning. The Nasdaq 100 is looking a little more vulnerable with the MACD trigger 'sell' and +DI/-DI sell' trigger. Look to this index for leads. The index which has been offering the low-key opportunity for bulls is the Russell 2000. It fell just 2 points shy of the 1,450 target I'm looking for, but no reason to suggest it can't make this tomorrow.  Technicals remain healthy. As a footnote, the S&P and Dow did little worthy of attention. Breakouts remain intact and Technicals are sound. For tomorrow, it's a watch-and-wait scenario for Tech indice

Minor Changes: Yesterday's and Weekend Comments Remain Valid

I don't want to overplay today's action as little changed in the broader scheme of things. Days like today are welcomed and help shape up swing trades for those trading in near term timeframes. The tight doji in the S&P could be used for a swing trade; buy a break of the high/short loss of low - stop on flip side. High whipsaw risk but look for 3:1 risk:reward and maybe trail stops if deciding to go with partial profits.

Semiconductors Breakout

It was somewhat disappointing not to see the Nasdaq and Nasdaq 100 make the break from resistance. However, the Semiconductor index did manage a breakout of 1,150. There was some weakness into the close but the fact the bearish engulfing pattern has been negated means the bearish overhang created by this pattern has been consumed.


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