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The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
* Major World Market Indices * Futures Markets * U.S. Sectors and ETFs * Commodities * U.S. Bonds * Forex

N.B.
* The content in my articles is time-sensitive. Each one shows the date and time (New York ET) that I publish them. By the time you read them, market conditions may be quite different than that which is described in my posts, and upon which my analyses are based at that time.
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DISCLAIMER: All the information contained within my posts are my opinions only and none of it may be construed as financial or trading advice...

Dots

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Thursday, March 15, 2012

The Necessary Ingredient to Fuel This Rally

Below is a percentage comparison chart of the Dow 30, S&P 500, Nasdaq 100, and Russell 2000 Indices, and the Financials ETF (XLF). I've started it from the October 2011 lows.

As you can see, the Russell 2000 Index has been leading the advance from that point on a percentage-gained basis until the second-place XLF shot above it on March 13th.

The Russell 2000 has been, effectively, in a basing mode since February, but has been moving up from its low of last week and is now near the highs of this year. It had begun pulling further and further ahead of the other Major Indices from mid-December, and they have closed the gap to the point now where they have all been moving up "in tandem" from last week's lows.

If the Major Indices are going to continue a convincing rally from here, it will be important for the Russell 2000 to break (convincingly) and hold above its February highs to provide added fuel. Once that has happened, we can see where the leadership lies. A failed breakout could lead to the onset of weakness, not only in this index, but also in the others.


Thursday's bullish 50/200 sma Golden Cross on the Daily chart below of Copper may provide further fuel to such a rally. Copper is currently trading near the top of its range, which began in mid-January, and just above its previous Head & Shoulders neckline from 2011.

One to watch for a potential breakout, along with the Russell 2000 Index.