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Small Caps Hold Support but Positive Momentum is Need for Further Upside

David Becker
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Small Caps Hold Support but Positive Momentum is Need for Further Upside

Small-cap stock have been lagging large-caps for most of 2014, but the S&P SmallCap iShares (IJR) and the Russell 2000 iShares (IWM) have yet to break down and actually weigh on the stock market. The S&P SmallCap iShares has traded within a big zigzag advance the last nine months. The immediate trend is also up. An upside break would signal relative strength in small-caps and this could be enough to propel IJR above the early July high. Support on the IWM is seen near the 50 and 200-day moving averages near $114.

It has been tough going for the Regional Bank SPDR (KRE), but the ETF trade within a short-term uptrend. The KRE experienced a trend line break and CCI breakout in mid-August. This signal remains in play with support at 38.50. As with IJR the KRE is at an inflection point because it is stalling in the 50-62% retracement zone. A break below 38.5 would forge a lower high and reverse the short-term uptrend.

Cyber security has come to the forefront over the last few weeks and months and this issue is unlikely to go away. In the last few months, there have been data breaches at Target (NYSE:TGT) , Home Depot (NYSE:HD) and JP Morgan (NYSE:JPM) . This section will highlight six stocks involved with security. The first six provide software and/or services to protect organizations from computer/internet driven attacks. The seventh, Synaptics (NASDAQ:SYNA) , makes finger print sensors that are used to access devices and services. Chartists should keep these stocks on their radar in the coming months and years. The S&P 500 is up around 7% and all seven are outperforming the S&P 500 over this timeframe. Symantec (NASDAQ:SYMC) and Check Point (NASDAQ:CHKP) are by far the two biggest. In fact, they are twice as big as the third largest, which is Palo Alto Networks (NYSE:PANW) .

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