Markets enjoyed a nice start to the week with the benchmarks posting solid gains. The Nasdaq led the way once again with a 1.2% move higher. The S&P 500 was up by 1%. Volume was somewhat absent of the move which took away some of the luster. But the price action can not be ignored. The Nasdaq took out the 3700 level and the S&P 500 its 50 day SMA. More setups are emerging and leading stocks are beginning to break out at a much better pace. Today’s action came by way of some under performing groups like the commodities. Is it bullish rotation about to commence or is it a negative sign when laggard groups are the biggest beneficiaries? Time will tell, but if it is the former it will be welcomed especially by the Nasdaq which continues to do most of the heavy lifting. Commodity producing countries also put in excellent days today. The FXI enjoyed its seventh consecutive up day today, with many of those in heavy trade, rising almost 2.5%. It rests just below a double bottom trigger of 38.76. Perhaps a pit stop at the 200 day may be the more prudent way to play that ETF. The RSX recaptured its 200 day SMA today gaining almost 3% in good trade, adding to last weeks 5.5% advance. Is energy going to start participating in a more meaningful way? The XLE is a hair away from a 84.06 flat base trigger that started earlier this year in May. The tape looks great here, but it is also where you should proceed with healthy bit of caution.
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