Small cap under pressure | stockbee

4/02/2013

Small cap under pressure

12 days of gains on small cap stock index were wiped out yesterday. The market showed split personality with the larger stocks holding up well but the small caps experienced selling. Small caps are the stocks capable of making explosive moves. They have had trouble making new high for last 2 weeks and were first to turn.

The key question is will there be follow through selling. The individual setups on many stocks look extended and there are signs of breakout failures and reversals after new high.

At this stage risk of correction in small caps is increasing and that is something to keep an eye on. 

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