Thursday, May 15, 2014

6:41 AM

The small cap indexes, the SP 600 and the Russell 2000 produced another distribution day yesterday, and gave up the majority of their gains from the prior two sessions.  Both indexes are challenging support levels and remain in downtrends with the RUT being the weaker of the two indexes. Declining issues led advancing issues by a 10 to 1 margin in the SP 600 and the RUT numbers were nearly as bad. The NASDAQ Composite numbers were not nearly as weak at 3.24 to 1 declining stocks vs. advancing stocks.

 Small cap weakness is seen multiple times in the images in the main portion of this report.  This tells me that after a couple days of rallying off of short term support, the conviction to commit money to the small cap stocks is not there.  Risk seems to be coming off the table as money flowed into utilities and defensive stocks.  There was an exception as some money flowed into biotech and specialty pharmaceutical stocks in the Stocks and Groups Moving to the Upside SmartGroup. I will be watching to see if this continues today in what looks to be a weak market at the open.  Retail sales from Walmart were released this morning, and they missed estimates and is trading down this morning. Even with the weakness in small cap stocks, the VIX remains stubbornly low and indicates complacency abounds in this market. Read Full Report