Small Caps

I had a member question about small caps and they are an interesting group I think worth looking at. Keeping in mind we only have an hour of post minutes data I don't want to jump too fast to conclusions especially as I haven't had a chance to look at a lot, but I can see Credit is starting to fall apart which is big when combined with what we have already.

Here's TNA which is in a very common set up that you'd expect to see break out to the upside, even if it was on total distribution, which is still very much a possibility and possible trade.

 Since TNA formed a bearish daily candle on the 14th (almost a shooting star) with increasing volume (a great reversal signal), it has formed a range, this isn't or isn't meant to look like a bear flag as it doesn't slant up and volume hasn't fallen off. The range is so obvious that a break above it is a VERY obvious target even if only for HFTs looking to make money on the order flow they get from creating volume. Lets be clear, small caps are a juicy target for an upside breakout, which is not to say a Bullish upside breakout as most shorts we've entered we have entered on this exact kind of move with the 3C trade negative.

 There was 1 positive divergence that halted the downside and put small caps in a range, only today did the 10 min chart put in a positive leading divergence as if they are getting ready to break these out to the upside and there's a lot of momentum stocks and high beta stocks in there, the typical QE stocks.

 Longer term on a 30 min chart you can see the underlying trade hasn't been all that bullish, in fact leading negative so even on a breakout I'd be looking for confirmation to short the breakout as a head fake move.

 The 60 min chart is also leading negative after having been in line since the positive divergence at the June 4 lows.

 However today after the minutes at 2 p.m., the 1 min (divergences HAVE to start somewhere) went leading negative.

The 2 min chart followed. I suspect this will probably continue based on what I've seen thus far.

I'll also be watching for a breakout as that zone is too obvious, if there's confirmation, then TZA would probably be my choice (long)