Small Caps, anything looking this good in a market that's breaking down on all the other indexes needs to be watched carefully...
The media is finally catching on to that, and in fact overdoing the pumping of this sector recently IMO...danger signs are flashing with all the recent attention.
On cnbc Friday evening, John Bollinger said the small cap move has a ways more to go. And he was congratulated for calling it two years ago.
And MSN this weekend, has a big story on it.
money.msn.com
Have also heard at least a dozen fund managers on tv in the past two weeks call them as a buy with much more room to move up.
Unfortunately, when it starts showing up in the mainstream media so much and everyone is looking for the same thing, the move is usually largely over. And with all the money that rotated out of big caps, if this massive sector rotation keeps up, it's going to be the recent strong sectors where the big profit taking hits. I saw it in some of the small caps I watch this week, when breakdown alerts started going off out of nowhere. And this comes after most of those stocks hit new 52 week highs in the past few weeks....
I do think that smaller companies may lead us out of the recession, but if everyone piles in at once, there is going to be a small cap bubble soon <g>
Taking a quick look at the RUT.X and the SML.X, the indexes are about to do a test of top - a test of the April highs on the daily chart.
mywebpages.comcast.net
mywebpages.comcast.net
If these tests of top fail, it will create double tops on both indexes. Both dailies right now have rising wedges targeting these exact test resistance areas so when the time comes that the SML.X nears 258.23 (It's at 256.39) and the RUT.X nears 522.96, they should be watched carefully. The RUT.X also has a test of top and a big resistance area straight ahead at 523.79 on the monthly chart. It has not broken over that area since 2000. SML also closed with a doji on the daily, which can indicate a reversal - up or down! The important test on the SML.X is coming up very soon - this week for sure.
As far as warnings of breakdowns go, If the RUT breaks 500 and the SML breaks 250, they are in trouble so you might want to set index alerts.
So that area is going to be TOUGH and everyone will be watching, since these sectors are the only thing holding this market up right now! |
