Friday was a relatively low key day, but there can't be many shorts left in the market after the rally from lows enters its third week. I would like to see some downside just to gauge the level of demand from where there was a failed rally in early March. Technicals remain vulnerable but do side with bulls.
In the case of the NASDAQ, I would like to see a move back to test 13,250, but if there is a surge past 14,500 then I would look to the latter as new support. The 200-day MA at 14,725 could also have a say in this rally. Certainly, bulls were happy to buy 12,500 and it seems that particular low is here to stay for the forseeable future. There is good strength in Stochastics and the MACD, with the index outperforming the S&P 500—so Tech stocks should continue to attract investment.
The S&P had a slightly better Friday than the NASDAQ and may be the first index to challenge the double Friday highs. The buying was enough to see a new 'buy' trigger in On-Balance-Volume—although this indicator has been in a confirmed downward (distribution) trend. Better is the outperformance against my favored Russell 2000, which is worthy of note. The index has already pushed past key moving averages, including its 200-day MA, so the mini double-top of February is next up.
Losing a little ground—but not my interest—is the Russell 2000 (via iShares Russell 2000 ETF (NYSE:IWM)). It remains primed to confirm a bottom, and start developing its right-hand-side base. The little handle it's forming just below $208 (IWM) has meant it has started to underperform its peer indices, but other technicals are in good shape. When this breaks its bottom-base it should quickly move to its 200-day MA, where it may consolidate again.
Things are looking nicely set for the Russell 2000 this week. Look for Small Caps/growth stocks to again return to the positive headlines column. The worst case scenario if there is some selling is for the Russell 2000 to undercut its 50-day/20-day MA—particularly if this selling was to happen all in one day, but let's not jinx things yet.