Investors have been keen to buy tech stocks but there has been a general reluctance to buy into other Large Caps and smaller growth stocks – a few exceptions aside.
The Nasdaq had edged a breakout into the February gap down but didn’t fill this gap; typically, when trading enters a gap it usually closes it quickly because there isn’t historic supply or demand to stall the action. But this hasn’t been the case for the Nasdaq. As a result, the index is sitting on breakout support, waiting for buyers to push things higher. On a positive front, all supporting technicals are bullish. Also, trading volume has remained robust – there is still interest in tech stocks.
The S&P is a few resistance levels below where the Nasdaq lies – the S&P still having to get past its 200-day MA, although it is nicely set to do so. Aside from weak relative performance against the Russell 2000 other technicals are bullish. Trading volume is falling, which is not a great sign but not terminal.
The Russell 2000 is further behind the S&P; it’s only working a challenge of the March gap down. Volume was light as it holds onto support/resistance. Technicals are bullish with Small Caps outperforming the leading index, the Nasdaq. However, it has a long way to go.
With the shortened week for Memorial weekend, bulls will want to see the Nasdaq push into filling the gap as the S&P and Russell 2000 move towards their next resistance levels. The relief rally continues apace as the V-recovery remains in play (for now).
You’ve now read my opinion, next read Douglas’ blog.
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Investments are held in a pension fund on a buy-and-hold strategy.
SOURCE: Fallon Financial Commentary – Read entire story here.