Market Alert - The Close

Sorry so late with the last alert. Major issues tonight, not with the market, but with some systems. Things are top notch now.

Well, that was a bit different start to a week. After the prior gap and implosion from last Tuesday's start, Monday started sluggish, but improved nicely. As noted in the pre-market alert, in an uptrend a soft, sluggish start can lead to a return of bids. It did. After floundering all morning, stocks started lower but caught a bid at the bell. Three legs higher on the session closed the indices at the highs with an impressive 'crap, I'm getting left out' last hour surge.

SP500 22.67, 0.81%
NASDAQ 71.65, 0.98%
DJ30 142.88, 0.55%
SP400 0.53%
RUTX 0.47%
SOX 0.76%
NASDAQ 100 1.05%

VOLUME: NYSE -15%, NASDAQ +6%. Volume moved down to average on NYSE post expiration, and NYSE was not in the lead Monday. NASDAQ trade jumped nicely, coming in well above average, as big names and some not so big names rallied very well.

ADVANCE/DECLINE: NYSE 1.7:1, NASDAQ 1.4:1. Yep, a large cap day after a solid smaller cap session Friday. That works. Money is staying in the market as new money comes into new areas and older areas.

As you can see, while Friday favored the small and midcaps, Monday it was back to the big names, NASDAQ names in particular, as NASDAQ 100 led the market higher. AMZN pushed up 2.5%, GOOG 1.6%, FB 2.25%, NFLX 3.2%, then adding 8+% afterhours on earnings. Glad we kept part of the position running -- and ADDED positions early in the session. I love the smell of a big payday in the morning.

It was not just FAANG. SQ traded 27M shares and jumped 6.41%. BLUE screamed 10+% -- man that stock can fly when it gets the notion. HTHT +5.29%. NVDA was not a slouch at 1.56%, but it was a laggard. FFIV, RHT in software were solid, but again, these were just average moves on the session. AMGN blasted higher 1.6%, IMGN up 6+%, IMMU +7.2%.

Oh, don't forget oil; it greased the way higher. APC +4.3%, HAL +6.4%, HOS 4.1%, MRO 3.77%, CRZO 5.26%. Whew.

Chips somewhat took the day off, but that was after some historic moves last week. A bit of a rest by STM, AMD, AMAT, MU is okay, particularly when NVDA and TXN again post upside moves.

Government shutdown? Yes, it ended, but even before it did stocks were on the rebound. Told you the shutdown would not be an event. Indeed, the democrats this time (a first in shutdowns?) came out with the black eye. Schumer's 'we got a great deal' attempt at obfuscating the utter lack of hand the Dems had this time only made the rally better: after the 'apocalyptic' tax reform failed to produce Armageddon and indeed saw the economy roar to life, the market concluded everyone could see the Dems' warnings about the economic impact carried no weight, and thus its demands regarding immigration crumbled into the dust trampled by another rally session. How poetic.

Maybe the rally was the result of the IMF stating that the US tax reform would boost US AND global growth. HA HA HA HA HA HA HA HA HA HA! As if the IMF knows economic growth from a hole in the ground. Hey, perhaps the IMF has new leadership with new ideas and some guts as well. There you go.

In any event, once again the market found leaders, some old, some new, and continued its advance. Not blowoff volume, though rising NASDAQ volume with its leadership was very welcome indeed. Just a solid move with solid moves from many sectors.

CHARTS

All new highs on all indices. Yes, even the laggards logged new all-time highs.

Should I break down each index? They are up 3 weeks and a fraction on this leg. The move is better than 45 degrees. SP500 and DJ30 remain extended and even more so. NASDAQ is not quite as extended after this run, but still extended. It does have FAANG going for it as they broke out relatively late, i.e. late October at last earnings season. Even they, however, can test some after this kind of run.

SP400 posts a new high and is trending up the 10 day EMA. Touched the 50 day in mid-November so not as extended overall, but this particular last leg is getting gangly as well. Sill pretty darn powerful though.

RUTX is not extended, clearing to a new high but spent October to late December basing. It is a spring chicken compared to the others.

Then there is SOX, a modest mover on the day but in a nice move higher after the breakout at last to a new all-time high. It is rather rested, and that is good for the market as it gives a place to continue buying even if the large cap indices attract less money. It is a real positive, one no one is noting, that SOX is rested after an 8 week consolidation before breaking to a new high.


Where does the dust settle on the day?

The advance continues across the board. The calls that surely the end is near grow louder. There is justification. The sky-high, record bullish sentiment and 30 year lows in bearish sentiment. Technically extended SP500, DJ30. I could go on. The market certainly does, but not lower. At some point yes, the correction will set in. We are wary of course, but we are also still moving into stocks, buying the likes of NFLX ahead of earnings, picking up AMZN on a new break higher, grabbing some more SQ, and scooping up great moves in a variety of other smaller issues in health services, drugs, biotech, oil. Oh, and we let stocks such as GOOG, HTHT, BLUE, and on and on continue to run.

NFLX will not hurt NFLX in the morning. Will it have coattails and pull the market with it? Or, will it be the situation where the week starts as a ball of fire then backfills? At least that sets up a good finish. This market has so many possibilities because of how far and fast it has run. And those do not preclude the downside scenarios. So, as noted over the weekend, we play the upside because it continues setting up, but watch for and ponder what will cause the market to run out of gas on this move.

Have a great evening!
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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