The major indexes all showed strength early in yesterday’s session. The NASDAQ and S&P 500 printed new all-time highs and volume ended higher across the board. However, the indexes only managed to rally about 2 hours before weakness set in, until the last hour of the day, at which point they bounced and rallied into the close.
All four major indexes ultimately closed below mid-range yesterday, to one degree or another. This constitutes stalling action, a subtle form of distribution. Regardless, yesterday’s action was nothing out of the ordinary given the sharp move higher we’ve seen over the last few weeks.
The single most important factor underlying a sustainable uptrend in the general market, is a broad base of healthy, constructive leadership. Fortunately, the market’s current leadership is robust and appears to be getting even stronger as earnings season comes to an end.
So, continue to keep track of the strongest stocks in the strongest groups, with superior fundamentals. Set your alerts and be ready to buy these stocks as entry areas present themselves. Never forget, a “perfect” entry area is always your best defense.
NOTE: Earnings season is winding down, however, it’s still important to check and double check when a stock is due to report EPS before initiating a position. These dates change, and often at the last minute.
The NASDAQ rose powerfully for the first couple hours of the day yesterday, but ultimately rolled over and finished the session a hair below mid-range, which could be construed as stalling action.
The Russell 2000 has continued to hold up and trade sideways in a tight range above significant support so far this week, which is a sign of strength, despite yesterday’s stalling action.
The S&P 500 rose powerfully for the first couple hours of yesterday’s session, but ultimately rolled over and finished the day a hair below mid-range, which could be construed as stalling action.
The DOW has held up near recent all-time highs and traded in an extremely tight range over the last four days, which is considered healthy and constructive, despite yesterday’s slight stalling action.