Wow. That’s all I can say. Yesterday’s market movement was nothing short of spectacular. The Russell 2000small-cap index gapped down 1% to open the day at 624.81. The index then fell to 620.61, before rallying at 12:00pm and closed the day higher by two points at $630.46. That was a nice reversal, and the positive momentum set up a nice pop for many stocks in the Small Cap Investor PRO portfolio this morning.  

Last week I wrote, "I’m targeting two key price levels: an upward move through 620 would likely lead to a retest of 660, while a break of 580 should tell investors to look out below.  Should the index move thorough 620, then 660, I’m looking for a big move higher to 725. Conversely, a drop to 580, then 550, increases the possibility of a bigger drop to 525." 

The fact that the Russell broke through 620 last Tuesday then rallied off the 620 resistance level yesterday, increases the chances that the index is setting up a new trading range with 620 as support. This type of reversal is a bullish sign, and the fact that small-caps led the rise has me whistling in the wind this morning. 

And speaking of wind, the storm that blew through the northeast over the last couple of days also demonstrated an intense reversal. On Wednesday morning I woke up to 14 inches of the heaviest snow I’ve seen in years. By Thursday morning it was pouring rain, and the snow was vanishing before my eyes. Then last night, the wind picked up to over 50 mph and shook the house on its foundation. This morning? Back to where we began, just a few inches of snow and bear ground showing through. The difference in the reversals is that small-caps rallied, while my hopes of a powder-infused white weekend in Vermont fizzled. I guess we can’t win them all! 

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