Can Tech and Small Cap Stocks Go after the Gap?

Welcome to Karpel’s Corner. This is where I throw out my thoughts on the markets and share some of my favorite strategies. I keep it market-focused, and never miss an opportunity to teach trading strategies and commentate on the latest trends affecting the financial markets. Hope you enjoy today’s post!

The Small Caps ($IWM) and Tech ($QQQ) have consolidated for the last four sessions after the gap on 10/31/14. The short-term trend is up as long as the gaps hold. This will be the first sign of selling pressure that could signal a correction.

I want to make clear that a pullback would be a short-term correction in a long-term bullish market.
Declines are viewed as corrections within a bigger uptrend. We would look to add the 10’s from the Tradespoon Bullish conviction list on these pullbacks.

This is just a stalemate waiting for a resolution. A break above $117.5 in the $IWM would signal an end to this consolidation and open the door to new highs.

The gap zone marks support at $115. A close below this level would be short-term bearish and would make the gap and exhaustion gap.

See you next time at the Corner!