A much needed boost to Small Caps gave value buyers a shot in the arm as the Russell 2000 gained nearly 2%, returning it above 200-day and 50-day MAs. It was an important recovery which wasn't quite mirrored by peer indices, but such indices are in much better shape.

Sellers took a third day of selling out of the Russell 2000 and this weakness made its way to the S&P and Nasdaq. The selling is more problematic for the Russell 2000 because there is a genuine lack of conviction from traders wanting to pick up an index which is trading at a deep discount to its peers.

Options expiration skewed volume action but it was a relatively neutral day.  Only the Russell 2000 suggested a more bearish undertone existed in the market. The S&P is currently probing its April high so it's of no surprise to see a small 'gravestone' doji appear on this test. I would be happy to see a small consolidation handle (ideally holding the 50-day MA) as a preparation for a push to new all-time highs but don't be surprised if the market doesn't wait for this. This rally has merit with excellent relative performance and an accumulation trend in volume.

It's looking like markets are keen to challenge April highs. The narrow consolidations which built up over last week was cleared by Tuesday's gains and held these highs by Wednesday's close. For the S&P, this came with an accumulation day. Other technicals are net bullish.

Not a whole lot offered by indices, but what was offered had more bullish overtones than negative. The Nasdaq continued with its shaping of a bullish handle. Volume climbed a little in registering an accumulation day. The index still has to put some distance from its 50-day MA but once it does and mounts a challenge on April highs it could really pick up momentum. On a more subtle note, there was an uptick in relative performance.

Friday's action was positive because so little happened. Markets had spent the first half of June rallying off lows, but last week was one where indices consolidated the gains. Not all indices were equal, but the effect was the same. The S&P closed with a doji - a doji which held above 50-day MA support. Volume declined in line with the consolidation; a positive behavior. Technicals are still net positive. Action points to a probable follow through higher and a challenge of the 52-week high of 2,954.

One of my pieces I wrote for the Kx Systems Insights blog: "For this month’s blog post we will delve into the mysteries of technical analysis of financial markets.  Kx Dashboards come with two built-in financial charting packages which can be used to demonstrate technical analysis. In this article we will use the Financial Chart component. Our next article will look at some of the tools in ChartIQ." Read More