Market Alert - The Close

SP500 was higher, but not that much. No, leadership still eludes it but it has continued to find a home in NASDAQ, and on Wednesday for sure in SOX. NASDAQ edged out yet another high as it climbs up the 10 day EMA, but SOX' move was the eyecatcher. SOX gapped over the March and April highs to a new post-2000 high. I mentioned chips looked good again this week and they are making good on looking good. Impressive moves.

The midcaps and small caps remain tantalizing and did indeed score upside sessions off support. They just did not make a clear break, still in the two week tests of the late April upside move. Look good, but still not able to capitalize on good patterns.

SP500 2.71, 0.11%
NASDAQ 8.55, 0.14%
DJ30 -32.67, -0.16%
SP400 0.62%
RUTX 0.56%
SOX 2.11%

VOLUME: NYSE flat; NASDAQ +5%. Some improved volume on the upside is not bad.

A/D: NYSE 1.9:1, NASDAQ 1.3:1. Still rather pathetic breadth.


Of course there are leaders and we were playing the leaders. NVDA gapped higher and rallied, but it was also gapping just below the January and February highs so we banked half the gain. Chips were good and we let our chips, outside of NVDA, rally, e.g. AVGO, MXL, MXWL, MU. We also picked up a position on SMTC. Most FAANG rested but as they rested NFLX broke higher. SEDG blasted higher 11% for us. TSLA, SQ, BCOR all were up again. Oil stocks were again higher in their rebound move. NUS surged and SSYS blasted higher yet again. Plenty of leaders from many divergent areas.

Many good movers indeed, but just think what would occur if SP500, DJ30, SP400 and RUTX actually threw in to the upside?

This action has to be infuriating or perhaps emboldening the bears such as Gundlach. He has called a top and says to go bearish. The market has not surged but it has continued to produce significant numbers of leaders as NASDAQ and now SOX hit newer highs. As it moves higher but does not post a broad-based move that may validate his conviction of a top. He may turn out to be correct. For now the setups remain solid, if not breaking upside in all cases, and there are very good moves in progress and just getting started that speak to what the market is DOING versus what people think the market MIGHT do.

Of course, we are playing what the market looks like it will do based upon the probabilities (seen in the charts and market internals and leadership and action). Noted that above. Again, it is what the market is actually doing and what it looks as if it will do versus our feelings about what it should do.

Have a great evening!

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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