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Monday, September 11, 2017

Market Alert - The Close

No sputtering Monday after the Friday inability to trigger higher ahead of the weekend. Worries North Korea would launch again, worries Irma might be very damaging, worries about what someone might say that might trigger someone else. When none of that happened stocks jumped early, held the move to the open, rallied higher into midday, and held the gains to the close. Upside all the way.

SP500 26.68, 1.08%
NASDAQ 72.07, 1.13%
SP500 259.58, 1.19%
SP400 1.16%
RUTX 1.10%
SOX 2.01%
NASDAQ 100 1.14%

VOLUME: NYSE -1%, NASDAQ +1%. NYSE trade hung in at average, NASDAQ rose to average. Wow, volume certainly was not commensurate with the price moves. Hmmm. What is new?

ADVANCE/DECLINE: NYSE 3.7:1, NASDAQ 2.6:1.

Clearly a big relief rush higher where all stocks were bought evenly, large cap and small cap.

Technically very good moves off the patterns. They were set up well technically on NASDAQ, SOX, SP500, RUTX, and they blew higher with gaps and rallies.

New highs: SP500 (closing). Oh, that was it. NASDAQ failed to reach a new high, intraday or closing. Who would have thought the sleeper would pull it off?

That is not bad, however. To us that simply means there is more time for the upside on this leg, possibly the last leg, of this particular recovery from the last round of selling. Remember, the pattern is new high, rally a bit more, then a selloff back to the trendline or other such support, repeat process. Therefore, that NASDAQ did not hit a new high and SP500 just touched one, there is more upside to come.

That said, there was a LOT of euphoria today about this move, about how the bull market had reasserted itself in impressive fashion. Yes, the price moves were impressive and there is also still room to run based on the market's habits in its rallies. Not much else changed, however. It may prove otherwise, but I doubt the MO has changed. Doesn't matter for us: we have great positions that we took early in the move that are working quite well, positions we took last week that are working quite well, and a couple of new positions today.

Why not more than a couple of new buys on this day? Because of its nature. A big gap upside on relief can be treacherous. Best to see how it tests tomorrow. Moreover, you have the market MO of rallies to higher highs then tests; not piling into new plays on this kind of gap at this stage in the rally makes sense until we see how the move holds. At least to us.

If some great buys remain and show themselves, so be it. We can pick some up, but we do so knowing that the nirvana feelings Monday likely shot up a lot of ammunition in the rally. We let positions run, be judicious with new positions that show great patterns and solid moves, enjoying the move, but not getting caught up in the 'new bull rush' euphoria. If it proves to be, man we are going to make some serious money because we already have great plays in great stocks making us money.

Have a great evening!

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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