Not all stock market indices are moving to new highs, and it’s important to reiterate this point.
The Dow Jones Industrial Average, Russell 2000, Dow Transportation Average, and Value Line Geometric Index (equal-weighted 1500 names) have NOT moved to new high territory.
As well, each of these stock indices have diverged meaningfully.
That said, the Nasdaq 100 continues to lead the way. We will continue to focus on large cap tech given its recent strength and resilience.
It’s thought that if Tech and the NASDAQ lead markets up in a concentrated manner, then it’s more important than ever to watch for when these start to fail, as they will likely start to lead us lower.
Despite some waning in the Semiconductor Indices like the SOX, the Nasdaq 100 (NDX) remains constructive after regaining Wednesday’s losses and closing back at new all-time highs.
Rallies into next week still look likely, and stocks like Apple (AAPL), Amazon (AMZN), Alphabet (GOOGL), Microsoft (MSFT), and Facebook (FB) should still lead the charge, until proven otherwise.
Key support lies near 11100 and until broken, it pays to still follow this move, looking to sell rallies into next week.
The Bottom line, it remains prudent to know what you own in this environment, as with only 59% of all stocks above their 200-day moving averages, hearing the media talk of new highs is a bit deceptive as quite a few stocks aren’t doing all that well.
For now, we’ll concentrate on trend following in the S&P 500 and NASDAQ, and while it’s right to respect a trend break in the weeks ahead, heading into end of week, it just doesn’t seem like we’re quite there. Movement under last week’s lows at 3319 S&P Futures 3326 is necessary for a defensive stance.
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Twitter: @MarkNewtonCMT
Author has positions in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
