Market Analysis and Summary
As it stands, the market and its leading stocks have been able to shrug off Paul Ryan’s failure to get his healthcare bill passed, as well as all the other negative political nonsense and partisan propaganda. Keep in mind, most would agree that the stock market is an extremely efficient discounting mechanism, which takes into consideration all available information, including present and potential future events. Therefore, one might interpret the current state of the market as an indication that the economy, jobs and earnings will very likely be firing on all cylinders six to nine months down the road, although only time will tell.
The major indexes rallied across the board yesterday. Volume expanded on the NASDAQ while it declined on the NYSE, so the distribution count remains at 6 days on the NASDAQ and 5 on the S&P 500. It wasn’t that long ago when the distribution count was a good bit higher and leadership was not nearly as broad, yet the market continued to make new highs. So, as long as the market’s leadership continues to chug along in a healthy and constructive manner and rotation continues to play its part, the market will likely sustain the current uptrend.
Yesterday’s rally was largely supported by all the market’s leading industry groups, even the flailing financial and steel stocks. Additionally, we have been finding an increasing number of constructive setups approaching “actionable status” over the last several sessions, which can clearly be seen in The Stocks and Stocks on Deck sections below. So, continue to build long positions as entry points develop and be persistent in your process of eliminating laggards and taking at least partial profits on extended names. Remember, “buying right” and maintaining a lean and mean portfolio is your number one defense and what ultimately allows you the ability to sit still, when the general market environment becomes volatile.
The NASDAQ rose 0.60% as volume expanded and closed slightly below its recent all-time high.
The Russell 2000 rose 0.73%, although volume declined and it closed below its 50-DMA.
The S&P 500 found support at its 50-DMA and rose 0.73%, although volume on the NYSE declined.
The DOW found support at its 50-DMA and rallied 0.73% as volume expanded.