U.S. Equities Stop Summer Monday Losing Streak, Hit 3 Month High But August 2012 Rally Under Pressure:
Small caps are lagging behind the overall market.
U.S. stocks rose today and hit a new 3 month highs with the S&P 500 creeping above 1,400 for a brief moment today. This was the first Monday in 10 weeks that stocks didn’t fall and end the day in negative territory. No economic news or negative headlines from Europe were able to destroy today’s market rally but it faded somewhat toward the end of the day.
Low volatility means some traders are stepping into long positions but today the VXX spiked in the last few minutes of trading as some investors took profits after a nice run up in prices. Small cap stocks continue to lag and are underperforming the overall market which is a slight cause of concern in the short run. Financial and technology stocks have been leaders to the upside but there has been a relative lack of participation from small cap stocks and this could be due to sector risk rotation or a preference for dividends in a choppy trading environment. We are monitoring tech, volatility and the small cap exchange traded fund IWM to see if new leadership will occur.