Stock Market - Update

In the top panel we have a 60 minute chart of the small caps (IWM) and in the lower panel is a 60 minute chart of the S&P500 (SPY). As you can see, the S&P has tested recent support from 8 days ago but the small caps (top panel) are clearly making higher lows. In fact, the NASDAQ is showing a similar pattern as well (not shown).

By comparing the major indices to the S&P(as I have done so in the above chart), a trader can sometimes gain a little insight as to the future direction of the overall market. Based on the higher lows that I am seeing in the small caps and the NASDAQ, the next move in my opinion should be to the upside.  The indices I am long are the NASDAQ (QLD) and small caps(IWM) which are the strongest. I'd avoid  buying the Dow and S&P as these two indices are the weakest. Lets see what happens!