You're The Pop To My Tart

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I have often written about blow off rallies (tops potentially) and bottoms. When I do, I cover volume movement, price action and most importantly, confirmation.

Tuesday’s session raised my consciousness in the small caps (Russell 2000) because it rallied to new highs on huge volume. Today, the price action remained inside the price action from Tuesday on light volume.

The Dow (DIA), also had an inside day on light volume and has yet to clear overhead resistance, in fact, the 2014 high remains well overhead.

The Volatility index closed unchanged. That makes sense given the inside day pattern. However, does it really make sense since clearly the volatility decreased yet not the price action of the volatility index.

There’s more. NASDAQ and the S&P 500 closed on new highs. To keep score-the number of reasons that the huge day in Russells could be the predecessor to a much larger move up-NASDAQ, SPY, Inside days or digestion, Phase support-bullish-that’s 4.

The number of reasons to support that Russells could be predecessor to a top-3-double the average volume, pause in the action and the Volatility not budging.

A solid portfolio favors the bulls seasoned with some hedges.

S&P 500 (SPY) Not overbought-that’s a good thing too

Russell 2000 (IWM) Inside day slightly overbought

Dow (DIA) Inside day. Still has miles to catch up or not

Nasdaq (QQQ) New highs

XLF (Financials) Followed through to new highs-nice

SMH (Semiconductors) New high close

IYT (Transportation) filled gap to 134.58-closed below-could be main place to look Thursday for a move up

IBB (Biotechnology) Passed the baton this week but still looks strong

XRT (Retail) Rested with an inside day

IYR (Real Estate) Rested with a doji day

XHB (Homebuilders) Also rested with an inside day with 2014 high 34.27

GLD Looks like an island top confirmed but not that convinced yet Monday was the high

USO (US Oil Fund) Island top confirmed here today-the 200 DMA next test

OIH (Oil Services) Has to clear 49.00

XLE (Energy) Has to clear 88.48 once and for all

TBT (Ultrashort Lehman 20+ Year Treasuries) Probably best to wait for the jobs report at this point

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