Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Since 2009 the pattern of almost all rallies has been V shape – once they begin they are relentless and almost without rest. While individual sectors take a rest from day to day or week to week, money just goes into a new sector, thus keeping the indexes elevated and with very few pit stops or pullbacks of any sort. This specific one is unique in that almost the entire move since late June has been in premarket, but at the end of the day the price is the price. The very popular QQQ ETF for example is up 13 sessions in a row now; according to some folk on twitter that has never happened. It is one thing to be up over a period of weeks, but not to pullback 2-3 sessions during that time is a bit ‘different’ than the old days.
As for the indexes there is little to complain about since the breakout on the jobs data a week ago Friday, other than near term overbought conditions. But again those can be worked out by this grinding up action day after day, with sector rotation underneath rather than any pullback. The S&P 500 has not yet hit an intraday high but has on a closing basis.
The small cap Russell 2000 has rushed past its all time high and gone parabolic.
Last Thursday the NYSE McClellan Oscillator was sporting a reading of 70, something not seen in 2013 and a quite rare reading.
Many of the “right” sectors have broken out and aside from being nowhere near any form of support sport nice patterns: industrials, financials, consumer discretionary.
Some lag still in transports …
One area that may pose an issue in the intermediate term is oil prices – after a 6 month base, crude has begun a breakout that could lead to a major move. At these levels it won’t be a major concern but if this continues upward for another month I’d expect hand wringing in the mid $110s to $120+.
It has been all about the central bank for months on end and we have another week with Bernanke speaking, this time on Capital Hill. Going vertical in the market straight into that meeting is a bit worrisome as the market tends to overreact even to an improper touching of his eyebrow so be aware of that in the very near term. Earnings season also begins in earnest this week with the S&P 500 type of companies coming fast and furious.
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