This comment takes over from the previous one (“SPX: Hesitation at the top, breakout at stake” - See link below).
MAIN US EQUITY INDEX REMAINS VERY STRONG
On a good day, this market goes up. On a bad day, it stays flat. This is the particularity of a very strong market backed by significant liquidity (QE) and an improving global macro backdrop. Add to that a decade of cut-throat corporate restructuring and you get the ingredients for the current market uptrend, which has been carrying us since 2009. There is no telling when this will stop.
THE TREND IS YOUR FRIEND
We would like to continue riding this major uptrend, but with eyes on the wheel for any signs of turnaround. We watch particularly the volumes to spot strength or weakness. They have been average at best on the way up, and I would very much like to see them spike for a further confirmation of strength. This seems to have happened yesterday at the close, which is a good start (please see 1-min graph below). Our next target remains 2,448 on the SPX.
IN CONCLUSION: THE BREAKOUT IS ON
In conclusion, we are still in breakout mode on the SPX, with most technical indicators in the green. Other main indices are equally strong, particularly the NASDAQ. The Russell 2000 remains range-bound attesting to the leadership of this market, which has been coming from the larger capitalizations. Small caps are yet to follow, or not – Market breadth is another indicator I continue to watch for turnaround signs. For now, I see no major/worrying divergence in this market, which makes it tempting to continue to buy the leaders into strength.
MAIN US EQUITY INDEX REMAINS VERY STRONG
On a good day, this market goes up. On a bad day, it stays flat. This is the particularity of a very strong market backed by significant liquidity (QE) and an improving global macro backdrop. Add to that a decade of cut-throat corporate restructuring and you get the ingredients for the current market uptrend, which has been carrying us since 2009. There is no telling when this will stop.
THE TREND IS YOUR FRIEND
We would like to continue riding this major uptrend, but with eyes on the wheel for any signs of turnaround. We watch particularly the volumes to spot strength or weakness. They have been average at best on the way up, and I would very much like to see them spike for a further confirmation of strength. This seems to have happened yesterday at the close, which is a good start (please see 1-min graph below). Our next target remains 2,448 on the SPX.
IN CONCLUSION: THE BREAKOUT IS ON
In conclusion, we are still in breakout mode on the SPX, with most technical indicators in the green. Other main indices are equally strong, particularly the NASDAQ. The Russell 2000 remains range-bound attesting to the leadership of this market, which has been coming from the larger capitalizations. Small caps are yet to follow, or not – Market breadth is another indicator I continue to watch for turnaround signs. For now, I see no major/worrying divergence in this market, which makes it tempting to continue to buy the leaders into strength.
Komen:
Volume pickup on Friday to end the week is what we were hoping to see. This was indeed the best-case scenario before the week-end. Let's see where we go from here, after the London attack and the Middle Eastern political stir. For now the market remains very strong. Along with such strength comes a large capacity to absorb potentially negative news.
Komen:
The main US equity index is strolling happily, and in moderate volume, below its next resistance at 2,448. It also rests slightly above its previous resistance (now turned support) at 2,400. For now, the best-case scenario is taking place in this upward market : Some necessary sideways/time-consolidation after a major run. It is still time to go long the market or its leaders, while keeping an eye tightly on the wheel for any sign of turnaround.
Komen:
The Friday selloff was led by Tech and the Nasdaq. Indices were down on twice average volume (thrice volume on QQQ), in what appears to be a meaningful move. On the SPX, this "outside day" took us through a 1.25% intraday swing while we opened and closed at a similar level - A sign of indecision in the midst of volatility pickup. Incidentally, we nearly reached at the intraday high of 2,446.20 our previously highlighted target of 2,448 on the SPX before we turned lower and rebounded on good volume during the last minutes of trading. Also please note the contrarian Russell 2000 - The tape's breadth indicator - which finally broke out of its range in the middle of the session against all odds, and fell back into it. Overall market direction remains up, but many signs of indecision in the short-term after reaching our SPX target intraday, make us turn cautious in the short term.
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