TradeMaster Daily Stock Alerts Blog

Small-cap stocks are expected to open flat to slightly lower as the market pauses to evaluate the big rally from Tuesday’s action. The Russell 2000 (NYSE:IWM) was off about 0.1% in after-hours trading, which would suggest a regular open near 720.00.

Without any key economic data to jolt the market today, investors will likely focus on earnings news and gyrations in crude oil prices. Crude oil prices were up slightly overnight, rising some 30 cents to pull above $119 dollars a barrel awaiting weekly inventory numbers later this morning. The market is anticipating a build of about 300,000 barrels in crude stocks on the report, which will be released around 10:35 a.m. ET.

On the big-cap earnings front, Cisco Systems Inc. (Nasdaq:CSCO) topped the forecast and rallied in after-hours trading, providing a lift to the tech arena, which was reflected in a 7-handle positive spread in overnight trading between the Nasdaq and the S&P 500. CSCO shares were up over 6% overnight, tugging other tech bellwethers like Intel Corp. (Nasdaq:INTC) and Oracle Corp. (Nasdaq:ORCL) into positive territory as well. If recent history holds up, small-cap stocks tend to outperform the Dow and S&P 500 on days when tech stocks are doing well relative to the other large-cap products.

In overseas trading, European shares were up modestly on firm bank and mining stocks and bolstered by M&A activity. Japan markets were higher overnight, as were Australia. Stock indices in Thailand, Singapore, the Philippines and Vietnam were all higher as well.

Despite see-saw volatility in recent days, the market is still trapped within a clear congestion zone, and could easily pause again now that prices are nearing the top of that zone. The Russell chart is testing trendline resistance drawn off both the June and July peaks; a decisive breach of those trendlines would suggest a breakout from the recent consolidation pattern. Aside from the patterns, look for resistance today at 726, which corresponds to the July highs. If the market starts to wobble, support comes in at 714.50, then at 707.50.

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