Finally, Some Conviction In The Markets

It has taken a few weeks for something decisive to happen in the market, but it looks like Friday delivered on some low-key bullish promise with a firm accumulation day.

The best of the action was reserved for the Russell 2000 (IWM) as it pushed through its 50-day MA with a solid white candlestick. Technicals are net bullish with a key relative performance uptick against the Nasdaq and S&P 500. Small-caps appear to be looking up, so now it's a question of whether the index can go on to break from its trading range.

The Nasdaq didn't have the same day as the Russell 2000, but it did push above last week's consolidation to mark a continuation breakout. Technicals are net positive as the Nasdaq outperforms the S&P 500.

The S&P 500 has been edging higher in a series of narrow range candlesticks. The index has doubled since the start of the pandemic, but the trading volume has been steadily falling over the course of the rally. Friday was a quiet day for the index on light volume, but this isn't a bad thing as money cycles into more speculative indices.

With the Russell 2000 leading the Nasdaq and the S&P 500, we have the recipe for a new phase of the rally. The broader (secular) rally feels long in the tooth for large-caps, but if the Russell 2000 can clear its trading range, it will offer a new avenue for money to flow. 

Disclaimer: Investors should not act on any information in this article without obtaining specific advice from their financial advisors and should not rely on information herein as the primary ...

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