Neither the S&P 500 nor the Nasdaq were able to challenge Thursday’s highs — and a selling opportunity was immediately seized at the opening bell. Both good intraday recoveries failed, and indices closed in risk-off mode – and risk reduction was evident in the leading Russell 2000 as well.
Small caps, though, offered big profit opportunities, and Wednesday’s shallow pullback provided a good new entry point after the S&P 500 spent a lot of time below consecutive broken support before bouncing off the 6,925 area – it’s always better to under-promise and over-deliver when it comes to potential gains. Best of all, the behavior of small caps is the result of slow and steady market expansion, while the S&P 500 is not making much upward progress, and big tech companies are seeing relative setbacks.
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