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Russell

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The markets continue to waiver, but are hanging on to positive territory, except for the Russell 2000.

Russell 2000 Daily Chart

The Russell 2000 had a nice six-day run going until Friday. That's when the index ran into trouble at the 200-day moving average, and 38.2% retracement level at 481. The Russell 2000 is only down 0.22% today, but could be a hint that small caps are starting to lose their luster. Looking at a relative strength comparison to the S&P 500 also shows that the trend of outperforming the S&P 500 may be coming to an end. But as long as this index continues to hold above the 50% retracement at 469, it's doing better than most sectors.

Biotechnology Index Daily Chart

One of the reasons the Nasdaq is flat today is that any gains from semiconductors is being offset by the Biotechnology Index's 1.14% loss. Biotechnology has been down four of the past five days, and is once again getting close to testing support at 474. On a relative strength basis the Biotechnology Index has been lagging since June. The long-term up trend dating back to April of 2000 is still in place, but we are getting very close to testing that level. If biotechs can reverse their short-term trend, and join semiconductors in moving higher, perhaps the Nasdaq will start to move. If semiconductors and biotechnology break down together, that would be a move to the downside.

Jeffrey Canavan
Assistant Analyst
www.premierinvestor.net

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