Markets started the week off in fine fashion as the Nasdaq rose 1%, and the S&P 500 by .85%. It was a broad advance as every major category advanced Monday. The S&P 500 managed to reclaim its 50 day SMA on a closing basis, something it was unable to do Friday as it was above intraday. Volume was not as robust as you would like to see, but the comparison to last Friday would not be fair given the options expiration. The Nasdaq did break above the 4486 double bottom we spoke about last week, and also took out the round 4500 figure to close at multi year highs. The tech heavy benchmark has now gained more than 550 points since the “tax day” low of 39.46 on 4/15. That session it bounced off precise 200 day SMA support. The industrial group scored the biggest gains Monday, and the IYJ rose 1.45% taking out its 50 day SMA in the process. It has recorded a bullish MACD crossover last week as it bounced nicely off its 200 day SMA. Keep an eye on the ETF as it approaches a double bottom trigger of 104.25. The 2nd largest component in the fund UNP, hit an all time high today, and is now on a 7 day winning streak. It now appears as if the 11 of 12 down days streak, between 7/23-8/7, is in the rear view mirror. I was wrong in my belief that the undercutting of the 50 day SMA in late July would be a problem getting back above. That is where technical analysis comes in handy however as stops are determined immediately after your entry and your chances of a large loss is limited.
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