Markets put in a very strong session Tuesday with the Nasdaq up .9%, the S&P 500 by .7% and the Russell 2000 m0re than doubling the latter’s move up a very impressive 1.6%. The small cap benchmark blasted off its 50 day SMA after being well rested after that huge move late last year. Of course this is a domestic index whose components will benefit if any “protectionism” takes place. It is now greenback sensitive either as the vast majority of their dealings are here in the US and would not have to deal with currency implications. The action is also a good indication of the current risk appetite of investors. The signal line on the MACD for the Russell is curling upward at the zero line and potentially ready for a bullish crossover and on the RSI it recaptured the bullish zone 50 number after a very brief slip below. These are all excellent signs and price action was excellent today, with nearly all of the major S&P sectors well into the green with the exception of health care and utilities. Materials were a clear leader as the XLB jumping 2.6% as the fund broke above a 51.79 cup base pattern. Lets try and balance our euphoria as the most astute investors will always worry about the impact to the DOWNSIDE. Perhaps one can point to the outperformance of FANG names, which for a good chunk of last year carried market returns alone on their backs. Is there new found strength a sign to be a bit more cautious. I personally have always favored stocks that are strong, but if one is worried that things have run to far and they “missed” moves maybe a name like EL would interest you. Below is the chart and how it was precisely presented in our Friday 1/13 Game Plan. The round 80 number was finally pierced to the upside for the first time in two and a half months on a CLOSING basis. Attempting to use the “lipstick on a pig” reference here somehow, pun intended.
This article requires a Chartsmarter membership. Please click here to join.