The transportation stocks continued their amazing run on Friday. 

Small caps and weaker groups also joined the climb higher as money flowed into homebuilding and biotech stocks. Several stock, group and ETF charts look to be in climatic runs, at least by their angle of ascent, but the volume is generally poor. This indicates that demand is light, but with many ETFs and stocks closing near their daily highs, this indicates that selling is being absorbed by buyers rather than short covering.

This is a chart of the iShares transportation ETF.  (Chart is only available in Full Report). Note the falling volume and rising price. Normally, I would like to see more demand on rising prices, but so far, it looks as if any selling is being absorbed by buyers who want in. The VIX now sits at an unbelievable level of 10.73.  Optimism and complacency abound!

The bank stocks were also strong on Friday, and money also flowed into regional banks and oil exploration stocks.

The NASDAQ Comp closed at it high on lighter volume which also shows the same pattern of absorption volume.  Internals were not overly impressive at 2.52 to 1 Advancers/Decliners, but this is where we use the power of HGSI to see that in the SP 600, the small cap index, advancers led decliners by  3.6 to 1.  The RUT was 3.92 to 1.  Both confirm the money flow into small cap stocks, and if this continues, this market will go higher

Read Full Report