Market Analysis and Summary
The DOW led the market higher again Friday, closed at a new all-time high and on the dead high of the session. The NASDAQ and S&P 500 both rose slightly and held up in a tight range, near recent all-time highs. Higher volume accompanied the new all-time highs on the DOW according to TradeStation data, although volume declined on the NASDAQ and NYSE, where it really counts. A distribution day fell of the S&P 500 due to time, which reduces its count to 2 days, while the NASDAQ held steady at 4.
Leading growth stocks are still sorting themselves out as the last busy week of earnings season gets underway, with many of the leading, Chinese, internet stocks scheduled to report. BIDU reported earnings last week, which led to a 9.45% rally as volume swelled to 362% above average. If this is any indication of what we can expect this week, from some of the other Chinese internet names, like BABA, JD, BZUN, WB, SINA, CTRP, ATHM, etc., that would be a big positive for the general market. These stocks have been some of the market’s most powerful leaders since the current uptrend began.
While they may not be the most exciting or sexy stocks in the whole world, we would note that many leading stocks in the financial, residential building and building related groups have formed constructive bases and started to break out. Not to mention, we are finding plenty of healthy and constructive bases forming in the technology and medical/biotech sectors, as money rotates from one group to another within these widespread areas of the market.
There have been some leading stocks that haven’t reacted well to their earnings reports recently, but overall, earnings season has been more positive than negative and the market’s leadership is acting healthy and normal given the circumstances. Until we see evidence to the contrary, the line of least resistance is higher. So, continue to build build long positions as entry point present themselves, however, slowly and with the utmost selectivity. Remember, “buying right” is our 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 rose 0.18 % as volume declined and held up in a tight range near recent all-time highs, which is constructive.
The small-cap Russell 2000 rose 0.50% and closed near its high for the day, although volume declined and it finished the session slightly below its 50-DMA.
The S&P 500 rose 0.19% and finished the session in a tight range, just a hair below recent all-time highs, although volume on the NYSE declined.
The DOW rose 0.19% and finished the session at a new all-time high as volume picked up slightly.