Summary: Small caps renew the charge while the NASDAQ marks time at the trendline.
As mentioned in last week’s Market Timing update, major indexes would need to move above the downsloping trendline before a resumption of the uptrend could occur.
This week’s market action indicated a clear distinction between market segments.
Winners were represented by small caps with tech stocks continuing to flounder.
Let’s look at some charts:
Small caps can be purchased through a number of ETFs but I will look at the IWM symbol – the ishares Russell 2000 index fund.
On Tuesday, IWM nearly tripped the 3×8 alert indicating a move upward was likely.
IWM moved sharply above the downtrend line on Wednesday’s trading with follow-through days occurring on Thursday and Friday.
Checking the NASDAQ, prices are still struggling to move solidly above the downtrend line.
QQQ managed to break above the overhead resistance on Thursday, closing above its midpoint of the day.
Priced fell on Friday’s action and created a Doji candlestick that can indicate indecision.
Notably, this action occurred right on the downtrend line which can now act either as support or resistance.
Watch next week’s trading for a push above the support area – or a breakdown below it.
Keep in mind that volume is a concern for the market across the board which could indicate more weakness ahead.
