Market Alert - The Close

A third day of upside following the Wednesday selloff looks somewhat promising, but still, after 3 sessions, the indices have yet to recover the pre-Wednesday levels. Perhaps a 1-2-3 bear flag that leads to more selling, but of course with this market you can never count out the upside. Indeed, many leaders rallied again with several key chips hitting higher highs, AMZN at a new high, MSFT rebounding nicely. Not a huge number of leaders moving up, but obviously enough stocks moved higher to post some very decent index gains.

SP500 12.29, 0.52%
NASDAQ 49.92, 0.82%
DJ30 89.99, 0.43%
SP400 0.50%
RUTX 0.72%
SOX 1.09%

VOLUME: NYSE -26%; NASDAQ -10%. Well, after some good recovery volume last week -- that was expiration week -- the continued move trade was rather pathetic, dropping below average on NYSE and NASDAQ. Not the thing great recoveries and subsequent new highs are typically made of.

A/D: NYSE 2.2:1, NASDAQ 2:1. Not bad breadth on a third day of upside, even improving for NASDAQ. Then again, volume was low . . .

There was a dearth of economic news, and with Trump in the Mideast the political headlines died down, at least enough for the market. Didn't hurt that defense contractors surged on a big Saudi Arabia arms deal and a $40B infrastructure announcement from Saudi Arabia and Blackstone, most of which would be used in the US. Hard money, hard deals tend to interest investors and traders more.

This even as one of the big names that called the market upside post-election is now calling the end of the 'big equity run.' More negative sentiment in some headline names does not hurt the upside; the more negative sentiment the better.

With the Monday upside the market response to the Wednesday selling remains positive enough, though I have to say again, even after three upside sessions the indices still have not recovered the pre-Wednesday highs. They are doggedly recovering, but the real test is if they can continue and recover those highs straightaway, showing the Wednesday selling was a one-day event.

We let positions run as most performed very well. Picked up some SIMO and CGIX, let SQ, SEDG, SOHU, BITA, NVDA and others continue strong moves.

Now as the indices move up to those prior highs, at least on SOX, NASDAQ, SP500, the real character of the recovery move is revealed. For now the market is making the recovery without missing a step, pretty much as it has done in response to most sharp selloffs during the rally.

Have a great evening!

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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