We are getting volatile, range trading in the S&P 500 Index (SPY, top chart), which is creating a number of false breakout moves. Meanwhile, small cap stocks today (IWM, bottom) have begun outperforming the large caps. I am interpreting all this action as part of an extended bottoming process that should have large caps testing recent lows, with possible non-confirmations from other sectors and indicators. In the interim, we're finding it dangerous to chase short-term market moves in this environment, as volatile retracements end up being painful. I continue to watch Cumulative TICK for clues as to the eventual resolution of this range trade. More to come in my indicator post for this weekend.
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