Stocks set new highs on Thursday but trade was mixed. As of yesterday, the small-cap Russell 2000 was still the only major index that had not set a fresh 52-week high. Still, the Russell led yesterday's advance as it posted a 1.0% gain. The S&P MidCap 400 tacked on 0.9%, while the S&P 500, Nasdaq and DJIA saw improvements of 0.6%, 0.5% and 0.4% respectively. Transportation, coal, financials and homebuilders were the big winners yesterday, while gold miners and computer hardware exhibited the most relative weakness.

For a second consecutive day, market internals were mixed. Volume was higher on the Nasdaq by a modest 1.0% but fell on the NYSE by 3.2%. Advancing volume topped declining volume by a factor of 3.5 to 1 on the NYSE and a by 1.9 to 1 on the Nasdaq. Based on the higher volume and the higher advancing volume, the Nasdaq earned an accumulation day yesterday.

The only major index that has not seen a new 52-week high in this recent rally is the small-cap Russell 2000. However the Russell has been consolidating for the past three sessions just below key resistance. Further, the Russell has begun to show signs of relative strength. Consequently, we are looking at a potential buy entry in the ProShares Ultra Russell 2000 ETF (UWM). A volume fueled move above $44.00 in UWM could present a buying opportunity. We are placing UWM on the watchlist. Trade details are available to our members in the watchlist segment of the newsletter.

 

Deron Wagner is the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, and MorpheusTrading.com, a trader education firm.