The markets caught fire today and moved sharply higher. The best moving sectors were the ones that looked like they could roll over or have underperformed. Based on how much it moved higher from the current price patterns, it looks like some short-covering was part of the buying.
That doesn’t mean that the markets cannot move higher — and they do look like they will. However, wide range days like this are typically followed by narrow range consolidation days. Blow-off moves continue higher immediately. We’ll follow up on this tomorrow.
The Nasdaq 100 did not move higher at the same rate as the other broader market indices and sectors. It was only up .26% whereas the S&P 500 was up just over 1%. The FANG stocks were the drag with the Internet sector ETF up only .32%, but AAPL, FB, AMZN, and GOOGL were actually down slightly.
The big movers were the financials that were starting to roll over and retailers that have lagged all year but moved up last week. That was covered in Monday’s letter and we thought that Retail sector ETF (XRT) would provide an entry, but this looks like some short-covering drove it higher. The regional banks were up almost 3.5% and the retail sector ETF was up just over 3.0%.
The sentiment gauge we follow moved to a bearish extreme and that is a concern for longs, but breadth has not yet so we do not have a sell signal from them, This lag in breadth with such a move higher today was in part is because of the lag in the Nasdaq.
DOW and Internals
Video Overview
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Happy trading! If you have any questions or comments, please e-mail Greg Capra at Greg@mastertrader.comor Dan Gibby at Dan@mastertrader.com
All the best,
Greg Capra
Managing Director of Master Trader
Pristine’s Founder and Creator of the Pristine Method
Dan Gibby
Chief Options Strategist
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