Small-Caps did not Confirm Rally

Impressive move to the upside, but the Small-Caps continue to lag and are unable to break resistance I talked about yesterday, at $124. This does not mean that the market cannot continue to move to the upside, but it will be hard without cooperation of the Small-Caps ($IWM). If the small-caps ($IWM) continue to lag or get weak, expect the S&P’s to trade in a grinding and choppy fashion.

The short-term Advance/Decline indicators have shifted into bullish territory. The S&P 500 ($SPY) is now challenging its highs but remains in a choppy uptrend.  Tech ($QQQ) continues to be the leader since it gapped up last week and has broken resistance, $212, reversing the short-term downtrend.

The Bonds ($TLT) have hit a new low in this latest slide to the downside. This money moving out from bonds is looked at as a potential catalyst for stocks. There is a red flag if the slide in bonds goes too deep too fast. This could add a little volatility into the June Fed meeting ,and at the very least, get the TV pundits in a tizzy!

I said yesterday that I would look at the commodity and currency markets. The Dollar ($UUP) moved to new lows since sliding off the highs in April. The Buck continues to be in a short-term downtrend and would only reverse out if the ETF $UUP can break $25. Oil ($USO) had a nice bounce off of $20, and has been able to hold the uptrend. If there is a challenge to the downside and $20 is broken, $18 could come fast.

For now Oil remains above the breakout level of $20 and is in a short-term uptrend. Finally, Gold ($GLD) has broke above its April highs, $117.50. This would reverse the short-term slide from April to mid-May and give Gold Bugs something to chirp about.

Have a great trading day and weekend!