E Tuesday Talk: On The Way Up - Again

After a continuation of the ride down (which was already in motion the week before) earlier in the week, stocks ended last Friday heading upward and the rally continued on Monday. The Dow closed at 34,398, up .54%, the S&P 500 closed at 4,197, up .99% and the Nasdaq Composite closed at 13,661, up 1.41%. Currently, futures for all three indices are up firmly.

Fair, Roller Coaster, Spa, Year Market

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Yesterday some of the major tech names had strong one day gains as did some of the entertainment and leisure stocks (based on strong anticipated re-opening activity, one assumes). See the chart below for a look at the action (NVDA, TSLA, AMD, MGM, NCL).

Source: The New York Times


Declan Fallon in his article Market Gains Take The Edge Off Friday's Losses takes a look at the charts to explain yesterday's market action.

"For the Nasdaq (COMP), today's gains managed to finish above both its 20-day and 50-day MA. Volume was light but gain did come with a MACD trigger 'buy'.  Not to mention, the index continues to outperform the Russell 2000 (IWM).  The other side of today's action, is that each gain focuses the measured move lower on to the 200-day MA.  Convergence increases the possibility of it happening. "

"Today's action simply extended Friday's trading. It looked good on paper, but didn't change the overall picture. We need to see trading ranges broken on volume to suggest there is an end to the consolidations in play for the Nasdaq and Russell 2000."

So the market seems to playing catch-up and no clear break is yet detected. 

In fact, TM contributor Terry Grennon writing in Bearishness Hits Advisors says that "As indicated by the NAAIM index, the "smart money" sentiment among professional investment managers has dropped to the second-lowest level in almost two years."  He provides the below chart to show readers what that looks like.

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William K. 2 weeks ago Member's comment

Interesting indeed, and I also am wondering as to when the housing bubble will burst. I see no way that my house is worth 11 times what I paid for it.