Dow Heads North As Tech Goes South

We are starting to see a larger split in market performance across sectors as Large Caps attract buyers, and Tech stocks attract tumbleweed. Caught in the middle are Small Caps. The Russell 2000 (IWM) chalked up another accumulation day without breaking resistance (or the 200-day MA). Tomorrow is a chance for the Russell 2000 to pick a side; will it break or will it succumb to selling pressure? Looks like an options swing trade as the next move could be telling.

The equal-weighted S&P and Dow Industrial Average both marked new breakouts, effectively clearing the last point of resistance before challenging August highs (the Dow still has 53K to break, but it's nearly there). Technicals are net bullish for both indices. Both of these can be bought on losses.

The weighted S&P gapped down (within its trading range) caught between the pressures of tech selling but broader buying. The "bull trap" is still in play, but there was a new 'buy' trigger in On-Balance-Volume and stochastics have successfully defended the bullish midline. Relative performance has soared relative to the Nasdaq, so if I was to make a call I would say this is more likely to break above its trading range (>7,800).

The Nasdaq gapped down in an ugly reversal to yesterday. This is sitting at last support of 26K before we have to consider the 200-day MA. Technicals are mostly bearish, bar a weak 'buy' in On-Balance-Volume, but if this is going anywhere it's going to be a move down to 24.5K.

The asset that's causing confusion is Bitcoin (BTC.X). I'm still long term bullish on this even if Tech stocks take a big turn South, but this has gone from bullish to bearish, back to bullish, and now looks bearish. Because I view this as long term bullish I don't think this will drop below its 200-day MA, or even 77K, but it's a bit flaky for a near term trade.

So, we have two parties at work here; bulls for Large Caps, bears for Tech, with Small Caps fighting for interest from both parties. Tech is heavily overbought, to the point a big haircut would still leave this net bullish on the secular bull trend. Because of this, the next few months will likely see some ugly noise within the larger bull trend. Investors have no reason to sell.