Wednesday, August 27, 2014

Slow Motion Holidaze

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The Russell 2000 has reclaimed its 10-week moving average as this index grinds higher in seemingly slow motion (need I say volume is non-existent?).  The real story here is that the small caps have materially underperformed both the Nasdaq and the S&P 500.

The major indices are in overbought territory on both the daily and weekly timeframes. Extremely bullish markets tend to ignore overbought readings.  For example, the S&P 500 monthly chart has been "overbought" since early 2013.

The summer holidaze end soon and next week may prove to be a critical juncture for the current rally.