Market Alert - The Close

Once again SOX leads the move, but once gain only SOX had a really solid move. Sure most indices moved higher, but the move was not a return to the rally. Again, outside of SOX; SOX broke to a higher high Friday and added another Monday. NASDAQ rallied for a second session as well after touching the 20 day EMA on the Thursday intraday low. NASDAQ, however, while moving higher off the test, has not really accelerated the move as has SOX, and of course it is not at a higher high.

Indeed, none of the other indices are at higher highs nor are they close to them, still just off the lows of the test of the post-SOTU breakout. Indeed, RUTX was second best on the session, but it is coming back from breaching the 50 day MA's and is not in the greatest pattern even after the Monday move.

SP500 0.87, 0.04%
COMPQX 14.05, 0.24%
DJ30 -21.50, -0.10%
SP400 0.17%
RUTX 0.37%
SOX 0.75%

VOLUME: NYSE -12%, NASDAQ -10%. Not a lot of volume working as stocks showed modest gains overall.

A/D: NYSE 1.5:1, NASDAQ 1.7:1. Ho-hum.

That is what you call pretty narrow leadership, pretty much SOX. And biotech. And China. Same old same old?

As of the recent history, those are the leaders. And they are really leading. Perhaps not exploding higher, at least in not all cases, but very solid moves. SOHU, CTRP, MLNX, SPPI, PLX, BLUE, VRSN, FB, VIPS.

Ah, the same story as last week. Still some leaders while the rest of the market tries to find some bids. Nice pullback, at near support, in position to move . . . just has not yet attracted buyers. So, we are playing those that are leading, anticipating the rest of the market is going to get the next upside catalyst and whoosh our positions even higher.

On the day the news was pushed by the INTC/MBLY acquisition. That shot our MBLY positions massively higher and we banked something over 500% on the options and 39% on the stock. Outside of that it was pretty sparse.

Jim Paulson opined that the market would run another 10% before the S&P caps the run. Oh THAT is useful. Perhaps Paulson is correct, but it is a wild assed guess, no more valid than the other guesses last week that the market only goes lower from here. Look at the indices, look closer at the leaders. Of course, you have to identify the leaders, and right now we are in those sectors. Again, we will see if there is a whoosh higher as the money hits. Still looking for the catalyst, however.

We picked up a chip (MLNX), a biotech (SPPI), and an entertainment stock (PENN). Got to take some gain on CORT, PLX and of course MBLY.

Where is the market? Where it was Friday, still seeking a new reason to rally, and while it is, the same leadership groups are leading higher. Typically the market follows, though many naysayers believe that won't happen. That is good; need those negatives out there to drive the upside.

Have a great evening!

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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