Market Alert - The Close

Okay, the stock market started the week with an upside session. It was enough to push SP500 to a new closing high as it joined NASDAQ and SOX with their own new highs once more. It was not enough, however, to really break it out with authority. DJ30, SP400, and RUTX were up, but they were not breaking out.

SP500 11.42, 0.48%
NASDAQ 28.44, 0.46%
DJ30 85.33, 0.41%
SP400 0.69%
RUTX 0.81%
SOX 1.51%

VOLUME: NYSE +10%, NASDAQ +8%. NYSE trade back above average as SP500 breaks to a higher closing high. Always good technical action. NASDAQ volume also back above average as NASDAQ breaks out to a higher high as well. Not huge trade, but solid.

A/D: NYSE 3:1, NASDAQ 2:1. Very decent upside breadth for a change. Perhaps the move is spreading out.

Perhaps it will be a piecemeal move, i.e. one index at a time: first NASDAQ, then SOX, now SP500 then . . . fill in the blank. Perhaps. It is slow going that is driving a lot of market pundits insane. Even Art Cashin today said the market action was not worth the car trip and a new shirt each session.

Ah, but therein lies the move's beauty. Many are complaining of the same thing, the 2+ month lateral move to nowhere. Others are taking it further, saying the market has topped and to go short (Gundlach) or at least be ready for an extended lateral 'selloff.' At the same time, despite the overall market being flat, at least as measured by the NYSE indices, there are stocks moving very, very well. You know that. No need to go through the list here; it is pretty much the leader board that we have plays on.

Thus, even as the frustration grows, the moves continue in quality stocks. The question is whether the move spreads out. Monday there was, yes, another attempt by SP500 to break higher. We have seen that movie before: SP500 broke to a new high two Fridays back only to fade right back down into the range. Now it is trying again. We will see if it too can hold a la NASDAQ and SOX, thus paving the way a bit more for the remaining indices.

On the day we did some buying because plays we liked were moving. A broader cross-section from machinery to chips to metals to telecom and more. We let other positions work higher as well though we did bank some MXL gain. Stocks are moving, perhaps broadening out, and for now we don't have a problem with having the upside exposure.

Have a great evening!

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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