Click for a larger image
Notice the following on the three month chart:
-- The market has been rallying since the end of November
-- Prices have broken through upside resistance from the upper downward sloping trend line
-- Prices are above the 50 day SMA
-- The 10 and 20 day SMA are moving higher
-- The 10 day SMA is above the 20 day SMA
-- Volume has been steady
Click for a larger image
Notice the following on the QQQQs:
-- The market has been rallying since the end of November
-- Volume has been dropping for the duration of the rally
-- Prices have broken through upside resistance from the upper downward sloping trend line
-- Prices have formed a triangle consolidation pattern over the last week or so
-- Prices are right below the 50 day SMA
-- The 10 and 20 day SMA are moving higher
-- The 10 day SMA is above the 20 day SMA
Click for a larger image
Notice the following on the three month SPY chart:
-- The market has been rallying since late November
-- Volume has been decreasing for the duration of the rally
-- Prices can't quite get over the upper line of the downward sloping channel
-- The 10 day SMA is above the 20 day SMA
-- The 10 day SMA recently turning down but the general trend is still up
-- The 10, 20, and 50 day SMA are jammed into a small price area
Bottom line: the situation with the Russell 2000 is very positive. That index has been rising on good volume and has broken through key upside resistance. All of these factors indicate early risk capital is getting in. The QQQQs are also in good technical shape save the declining volume over the last rally. However, this could also be a sign of people not wanting to over-commit to a possible rally. The SPYs suffer from two problems: they haven't broken above hey upside levels yet and they have declining volume. Again -- this could be because people want to participate but not too much or there is leglitamte concern.
Still, the positives outweight the negatives on these combined charts. The markets look poised for some early year gains.
