Small Caps And NASDAQ Make A Comeback In Week Ended April 27, 2012: Is the Correction Over?
The NASDAQ held on to gains this week as small cap stocks rebounded along with the Dow and the S&P 500. We have been monitoring small cap stocks for the last week to see if they would crack below lower support levels (which did not occur) and the upward momentum in U.S. equities increased.
We asked last week if the long term rally was returning and we have more evidence that the correction may be over because volatility has reached new lows while the Russell 2000 continued to outperform the NASDAQ, Dow Jones Industrial Average and the S&P 500.
Is the Correction Over? Maybe…
We aren’t ready to call the correction over and rangebound trading could occur for the next week but the Dow closed out April 2012 in positive territory which is a good sign the long-term rally could be back. We are still watching the financials to see if they will help us determine if the market has more room to rally and we don’t think it is time to get rid of long positions in favor of short holdings.