Stock Market Commentary: Holds Gains as Sentiment Improves
Courtesy Fallond Stock Picks
Yesterday was an important day technically with all round breakouts and improved market breadth. The markets did little today (which is good) but it could be down to market breadth to say more about how far this rally can go. The percentage of Nasdaq Stocks above the 50-day MA has seen more stocks break through and hold their 50-day MA as the November rally has advanced. At 45% it is well off its highs (which can be viewed as bullish or bearish) but it does leave on the table the potential for a July like rally.
The slower moving Summation Index turned bullish yesterday. At -311 is 800 points from highs and some 700 from reaction lows, so again there is room for maneuver on either side of the equation. But given its relatively low volatile behavior and current bullish cross it looks to be favoring a new rally.
Finally, the Bullish Percents have yet to trigger a ‘buy’, but are only a short distance away from generating a signal from 58% support. In July, a similar signal supported a rally which lasted 3 months – could it happen again?
There is reason enough to take advantage of buying the next dip to the now converged 20-day and 50-day MAs (use 20-day MA) with a loss of November lows as a stop.
