Market Analysis and Summary
The DOW continued to make new all-time highs, the NASDAQ and S&P 500 held up constructively in a tight range near recent all-time highs, yet the small-cap Russell 2000 was divergent once again and closed below its 50-DMA. This is hardly ideal action, but not yet a concern at this point either. The distribution count now stands at 4 days on the NASDAQ and 3 on the S&P 500.
The most important factor is always the health and breadth of the market’s leading growth stocks and currently, they are in fine shape. There is no shortage of leading stocks in the technology, medical/biotech, financial, residential building and building related groups, that have formed constructive bases and look ready about ready to break out.
So long as the uptrend in the general market continues to be supported by a broad base of healthy leadership, we would build long positions as entry point present themselves, however, slowly and with the utmost selectivity. Remember, “buying right” is your number one defense. Don’t buy a stock more than 1-2% past its pivot point and get into the habit of eliminating laggards and taking at least partial profits on extended names.
NOTE: Check when a company is due to report EPS, before initiating a position. These dates change frequently and sometimes at the last minute, so double and triple check to be sure.
The NASDAQ fell 0.35% on heavier volume, which meets the definition of distribution, although it held up near recent all-time highs and closed above its 21-DMA, which is constructive.
The small-cap Russell 2000 fell another 0.54% on heavier volume and closed below its 50-DMA, as it continued to diverge from the other major indexes.
The S&P 500 fell 0.22% as volume on the NYSE expanded, which meets the definition of distribution. However, we would note that it held up in a tight range and finished the session with a constructive looking inside day, slightly below recent all-time highs.
The DOW rose 0.04% and closed at a new all-time high, although volume declined.