Market Alert - The Close

Monday saw a bit of slowing in some -- just some -- of the post-election rally indices and stocks. SP500, NASDAQ, DJ30 and SOX all took a day off more or less. SP500 worked laterally for the third day, NASDAQ also worked laterally for day 3 (though much more volatile). SOX paused after a Friday move back above its trendline.

The big moves remained in the small and midcaps. RUTX surged 1.26%, SP400 1.61%, both moving to all-time highs.

SP500 -0.25, -0.01%
NASDAQ -18.71, -0.36%
DJ30 21.03, 0.11%
SP400 1.61%
RUTX 1.26%
SOX -0.62%

A/D: NYSE 1.1:1, NASDAQ 1.5:1

Metals, financials, transports continued their flights while industrial equipment and retail tempered their upside after good moves.

FANG was butchered once again. Any rebound hope was premature as the big names were pounded lower. Perhaps not so much NFLX; it tested the 50 day EMA and bounced to a doji. Perhaps it can move higher but it is something of the lone wolf of the group.


NEWS/ECONOMY

There was no scheduled US economic news on the session, but there was news. With the Fed set to raise interest rates a whole 25BP in December money won't be free anymore for the big players. Okay, even more important is spiking interest rates regardless of the Fed. The 10 year Treasury is +51BP since election night.

Thus, companies are busy trying to get deals done before the cost of money gets too high. Thus, more M&A.

SIEGY (Siemens) is buying MENT. Samsung announced it is buying HAR. Samsung and Siemens may have had further impetus: the dollar is screaming higher, and if they want to buy, they apparently figure they better buy now as both are foreign companies.


The post-election rally certainly is extended but for the leading groups it has not slowed. As the breadth shows, the move is not that broad, but it is strong in the DJ30, RUTX, and SP400 indices. Perhaps out of the NASDAQ and SP500 lateral moves stocks from those indices will spring higher again (or at least more of them; financials are a good part of SP500 and many smaller banks trade on NASDAQ). SP500 is certainly showing the kind of nice tight lateral move you want to see in a consolidation.

There are some good setups upside if new groups start to get some money. Monday we picked up some more C after its day of pause, some EWW (the Mexican ETF) as it bounced a bit, some JNPR on a good break higher in its pattern, and some RATE as it continued its surge from Friday. We will continue looking for upside setups in the event SP500 and NASDAQ feel the need to join the upside. At the same time, perhaps the Dow and other leading indices take a breather to set up their next leg.

Have a great evening!

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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