Market Analysis and Summary
The major indexes closed modestly mixed again Friday as volume swelled across the board. This huge spike in volume was largely due to the Russell rebalance. The NASDAQ and S&P 500 both closed up for the day and near sessions highs on heavy volume, which is constructive. Not to mention, each major index shed a distribution day due to time. So, the count now stands at 4 days on the NASDAQ and 2 on the S&P 500, which is still quite tolerable.
The market’s uptrend continues to be supported by a broad base of healthy leadership. Most of the big-cap technology names that sold off with the NASDAQ when it got clobbered two weeks ago found support at or above their 50-DMA’s and have been consolidating constructively since. Also, there has been no shortage of stocks breaking out of well-formed bases on heavy volume, in the market’s other leading industry groups over the last couple weeks.
So far, the money that came flooding out of big-cap tech shares has had no problem finding its way into the to the leading stocks of other industry groups. Many of which, have been building constructive bases over the weeks and months prior. This is what healthy rotation looks like, besides which, the majority of leading stocks in the tech area of the market still look fine.
Remember, fast sharp corrections are no stranger to bull markets. Also, it is common for a healthy, general market uptrend to experience short and medium-term corrections along the way to new highs. This is why it’s so important to rely on the action of the market’s leadership as a guide, especially when the general market is in correction/consolidation mode.
As long as the major indexes hold above their 50-DMA’s and the action of the market’s leading growth stocks remains healthy and constructive, continue to buy leading growth stocks as entry points develop. Remember though, “buying right” is critical, especially in the current environment. Don’t buy a stock more than 2% past its pivot point and make a habit of eliminating laggards and taking at least partial profits on extended names.
The NASDAQ rose 0.46% on heavier volume, finished the session near its high for the day and slightly below recent, all-time highs.
The Russell 2000 rallied 0.73% on heavier volume, finished the session near its high for the day and slightly below recent, all-time highs.
The S&P 500 rose 0.16% as volume on the NYSE expanded, finished the session near its high for the day and slightly below recent, all-time highs.
The DOW closed nearly unchanged, in a tight range, near its high for the day and slightly below recent all-time highs, as volume expanded.