The market spent some time going sideways in last 8 days There has been selling in some in extended stocks and some breakdowns in stocks post earnings. But at the same time new sectors have had breakouts.
Major stock indexes have run into resistance around their 2012 highs. Breaking the year long range is proving a challenge for the market. The S&P 500 and Dow Jones Industrial Average has failed in recent days to take out the high. However the Nasdaq 100 and Nasdaq Composite have broken through the yearly range and also 11 year range.
Long term range breakouts indicate change in underlying economic conditions and empirical observations support the belief that such major range breakout often lead to long duration rally.
While the market has run it to bit of trouble here, the underlying breadth is positive and buyers buy every dip. Good example of that was yesterday. Stocks flirted with their worst point decline of the year before staging an impressive comeback in the last half-hour of trading. The Dow has risen in five of the last six trading days. But yesterday was the eighth straight session it failed to close above 12,900, let alone 13,000, underscoring the rally’s fatigue.
The gap up you see today morning may be the straw that breaks the camels back and we might get multi month range breakout on the two indexes.
Keep focused on finding best setups. Do not worry too much about market till you see 500 plus day on 4% down in MM.
Looking for setups like these. There are lot of nice setups below the surface.