It was a big day yesterday for the Semiconductor Index which finally boosted other indices. Semiconductors finished above March/April highs on new near-term highs in relative performance. It has been a big week for this index and this could set a positive tone for the rest of the summer.
The NASDAQ broke out from consolidation, safely clearing converged 20-day and 50-day MAs. This is setting up nicely for a challenge of 4969, and could easily go on to challenge 2015 highs. Technicals delivered a positive MACD trigger 'buy' and ADX 'buy'.
The Russell 2000 made a clean break of the downward channel yesterday and now finds itself up against former rising channel support turned resistance. The technical picture is a little different with 'buy' trigger in Stochastics and ADX. It also delivered a break of 20-day, 50-day, and 200-day MAs. Relative performance has picked up and if this can be maintained it will re-affirm the secular rally from March 2009 (long in the tooth this rally is); long term rallies require Small Caps leadership.
Large Caps were least effected by these gains. The bearish head-and-shoulder pattern in the S&P is not negated, but it is under pressure. The only technical change was a bullish cross in ADX.
Bulls look to have cracked the code. The failure of the head-and-shoulder patterns to follow through on what were managed breakdowns is a big hit to bears. Today, assuming action quietens, then it will be important indices finish near yesterday's highs.