The NASDAQ and Russell 2000 were able to find enough buyers to push both indexes well above their opening prices. The same could not be said for the S&P 500 and Dow Jones Industrial Average. Last night futures were indicating the market would open lower, but not devastatingly lower. Since we have not had a budget in years we continue to fight over continuing resolutions continues to put fear into market participants. Positive economic news came from a few ISM readings led by the Chicago PMI coming in above expectations and better than the prior month. However, it wasn’t enough to push the market to close into positive territory. To make matters more interesting it is end-of-month and quarter so volume will be skewed. It is clear small caps and the NASDAQ indexes are the leaders while the S&P 500 and Industrials are lagging.
It certainly appears the NASDAQ and Russell 2000 indexes are separating themselves from the rest of the pack in terms of leadership. If this market can regain its traction and move higher both of these indexes should be the ones leading the way. We tend to stay with the stocks leading the way rather than focusing on laggards and right now we’ll look to the NASDAQ and Russell 2000 for names to be leading this market.
The Dow Jones Industrial Average is now for the second day in a row below its 50 day moving average. It is not a terribly good sign when the index is unable to maintain its 50 day moving average. However, the S&P 500, NASDAQ, and Russell 2000 remain above their respective 50 days may help the Dow rise above over the next few trading sessions.
The mess in DC will likely dominate the news headlines over the next few weeks with the Debt Ceiling debate set to heat up. Mid-month we are likely to see a possible default, but it is a coin toss. The prevailing trend in majority of the indexes remains up and until this situation changes we aren’t going to change our stance. Many will point to 2011, but this time around the indexes do appear better positioned for news to hit the wires. Not too mention, how many want to be short into news of a “deal?”
Tomorrow starts a new quarter and month. The question is will there be a year-end performance chase? Are you ready for one? If not, Big Wave Trading is your spot to be.
