The Memorial Day shortened week on Wall Street started out strongly with a 1.2% gain for the NASDAQ on Tuesday, but for the following three days the index only managed to add another .14%. Volume was relatively light each day except for Friday when the volume numbers for most of the indexes managed to edge above their 50 day moving average lines. The SPX managed to reach a new high for the day which was, of course, touted in the press over the weekend. The Small Cap 600 was only up .46 for the week. If the small caps are supposed to lead, they have some catching up to do, and the weekly chart is still in a downtrend, but it basing.

A close look at the charts shows narrow bodies in the three closely followed indexes, the SPX, DJI, and the NASDAQ Composite all of which traded down most of the day. The push to new highs was in the last 1/2 hour of trading as shorts covered going into the weekend, and the bulls pushed hard enough to establish new record highs in the DJI and SPX. The small cap indexes did not fare as well, and showed signs of distribution as the SP 600 closed at 34.83% of its daily range on its heaviest volume of the week.

Semiconductor stocks continued to do well as a group, and the biotech index managed to gain 3.68% for the week. Some communication equipment stocks also did well was as ARRS was most in demand in the database. This was the 4th consecutive week that ARRS traded up on heavy volume. ARRS is a beautiful example of a tight chart that sold off on lighter volume before breaking to new highs.

Read Full Report