Small Caps Still Rising – Technical Analysis Notes March 19, 2012:
Thought the interest in small caps was over? Not yet. Small capitalized stocks are participating in the current rally and today was confirmation that buyers left bonds in favor of stocks and riskier assets. Last week’s economic data was positive and gave economists new evidence that the market has more room to go higher if confidence in the future of the U.S. economy improves. The Russell 2000 has made a comeback in the last few trading days since the breakout that occurred last week.
Economic data released this week is expected to be positive and news headlines from Europe carried little weight compared to late last year. It will soon become a sector-picker’s market and individual analysis of stocks for new leadership will be important. Time to start focusing on sectors poised for growth and looking at individual companies within them.
The Russell 2000 hit a 3 month high and is important for measuring which way stocks are headed short term. Market fundamentals and economic data look good from our view but we won’t raise our outlook at this point from mixed positive. Rangebound trading or a slight pullbacks should be considered opportunities.