Resistance In The Dust?

The week isn’t quite over, but it’s been an interesting couple of days so far.To show you what I mean, here’s a 5-minute intraday chart to show you the back-and-forth, and back again.

Of particular notice is the volatile action yesterday afternoon, after the Fed revealed a more dovish tilt. With such indecision following the announcement, today’s thrust up was even more impressive.

And after today’s strong up-day, it looks like the S&P-500 might be leaving the late-2018 resistance in the dust! Take a look at the daily chart of SPY below, where you can see it’s broken above the prior trading range:

So it looks like that $290 area might be up next as bulls continue to press the initiative. And if you think that looks good, now take a look at the Nasdaq 100, which is really soaring.

To be honest it feels like a pullback is overdue. But the strong breadth of the recent rally is hard to ignore and might imply more momentum ahead.

But what’s also interesting is what parts of the market didn’t participate. From a sector perspective, the notable lagger was Financials. You can see on the FinViz heatmap below this was a real sore spot:

And from a market cap perspective, the segment of stocks that was down on this massive update were disproportionately smaller market capitalization. The pie graph on the right illustrates while the one on the left reinforces the financial underperformance

This is also reflected on the IWM (Russell 2000 ETF) daily chart, where you can see the index has failed to make a higher high (unlike it’s large-cap brethren)

So all that to say, it looks like bulls are in the driver’s seat. But I’d like to see small caps confirm the risk-on attitude. Let’s see how they close the week. In the meantime…

Here’s What I’m Reading:

Are You New Here? Then Read This…

Find Better Trade Ideas and Manage Risk

Do you want to make smarter trades? Are you hungry to improve your edge?

See the Breakout Stock Blueprint

Get 4 free email lessons to improve your trading

We respect your email privacy