Market Alert - The Close

More of the same: NASDAQ and SOX move once again to new highs, NYSE indices still wannabes. They are still holding near the top of the range, but still no big push higher.

SP500 1.59, 0.07%
NASDAQ 8.23, 0.15%
DJ30 -35.95, -0.18%
SP400 0.06%
RUTX -0.17%
SOX 0.16%

Sounds as if I am complaining about the action, but not really. Just noting that the NYSE indices remain hesitant to break from their ranges. Plenty of good patterns including areas such as restaurants, just not many making the breaks higher.

Contrast that with the areas that are moving. Some strong moves in the China stocks Wednesday as ATHM, BABA, BIDU, NTES broke sharply higher. FAANG moved well enough as FB lead the pack higher. Semiconductors were okay, not blowout. MCHP gapped higher on earnings, AMD, AVGO, QRVO posted upside moves as well. Other leaders continue higher as well, e.g. ADBE, URI.

Some new groups again show some life after a pre-earnings air pocket, e.g. restaurants. PNRA gapped upside big. WEN, JACK have nice setups. BWLD gapped lower then reversed to the upside. If the market can produce new leaders, the prospects brighten for perhaps some NYSE index breakouts as well.

Wednesday, however, there were no NYSE breakouts, just more of the same. With that we picked up some positions in BABA, ENPH, and X. Took some gain in QLYS ahead of earnings. Most everything else worked well enough to leave it for another session.

Ah, another session. Perhaps NASDAQ and SOX move again to new highs. Then you watch to see if the NYSE indices can finally follow. Trending higher, holding gains, leadership is in position, some of course moving higher as NASDAQ and SOX hit higher highs. All the while if good stocks makes solid moves we pick some up.

If that sounds very familiar, no doubt it is. It is the same pattern since the gap higher/gap lower two weeks back. Heck, even before that. It is sending some stocks higher to targets, but a lot are stuck in limbo along with the NYSE indices. To really get profits flowing, the lateral status quo of the NYSE indices needs to change to upside movement to follow NASDAQ and SOX. No secret there, just not making that move yet.

Unfortunately, earnings are not providing a market boost, and the political scene is not helping either as tax cuts/reform is pushed back along with ACA repeal as quite frankly side issues clog the pipeline. The republicans may not realize it, but if they don't get reforms done early, they won't get them done in anywhere near the shape they want. For a market that rallied hard on the idea of tax reforms and regulation reduction, this clogging of the legislative pipeline is not providing a catalyst and indeed may be what ultimately holds the rally back from really breaking to new highs.

Have a great evening!
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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