Quick note from Blain: The signed options books giveaway ends TOMORROW. Leave a comment on this post to be included in the giveaway or comment on our Facebook fan page. Winners will be announced with tomorrow's recap."
After a wild day Friday, Monday looked to be a very constructive session for the market. China's market surged 3.4% and Japan 2.5% which seemed to lead to good feelings, as no imminent action in Syria seems to be afoot. This led to a gap up at the open and the market never looked back all day. The S&P 500 gained 1.0% and the NASDAQ 1.26%. A lot of technical conditions improved today so it was potentially a very important session. Let's delve into it.
The S&P 500 was rejected at the 50 day moving average Friday in that wild session but today it cleared it. Further it made inroads in making a new higher high versus the highs of mid August which is a positive. While not out of the woods things are looking much better here.
The NASDAQ continues to be the recent star, it has had a much nicer chart pattern and today had a very clean breakout.
The small cap Russell 2000 looks a lot like the S&P 500, a downward channel that was broken out to the upside from today.
With the NYSE McClellan Oscillator we PREFER it to remain positive while the market rallies, but it is not necessary. That said, it is preferable. This went into positive late last week if it sustains in the +10 to +40 range over a moderate amount of time that would be healthy and indicate a good breadth measure in the market.
Much like the S&P 500, transports broke over the 50 day moving average today and out of this downward channel - that's positive as long as it holds.
Biotechs remain the star of 2013. Period.
Housing, which has been in a major downtrend all summer, had a very nice day. The ETF for the sector is still below both the 50 and 200 day moving averages so longer term that needs to change but for now there seems to be a break out of a long term downward channel.
In terms of sectors, when these downtrends/corrections end we are always interested in seeing which groups lead. Outside of biotechs, right now it seems to be energy (perhaps Syria dependent) and today that was followed by industrials.