Thursday was a day oh so familiar; a gap up in the morning and sideways to slight upward bias the entire rest of the day. Despite being short term overbought on some secondary indicators today was a day sandwiching a holiday which seemingly mostly seem to resolve to the upside. The S&P 500 gained 0.47% and the NASDAQ 0.28%. There was some decent economic data:
Initial claims for state unemployment benefits decreased 42,000 to a seasonally adjusted 338,000, the Labor Department said.
Now that we have had a week to process that bullish engulfing session a week ago Wednesday you can see why those patterns are important to note. The indexes have gone vertical since we had that signal hit. Of course there were 2 similar signals of bearish intent that did not work in November but it is worth keeping in mind the power of an engulfing day.
If we want to point to one extreme, the NASDAQ has been in a defined channel all year. Except for 10-12 days during the year, it has remained within this channel and those 10-12 days were all moments of extreme selling that took the index BELOW the channel temporarily. But now for the first time all year we see the channel broken to the UPSIDE.
Transports have also broke out.
The NYSE McClellan Oscillator is another short term indicator indicating short term overbought.
The yield on the 10-year Treasury note flirted with 3%, which is where it stalled in late August.
This is a time of year with a lot of institutional money sidelined that the retail investor launches him or herself into the year's momo favorites. For example 3D printing stocks were in favor most of the year - today we saw 3D Systems (DDD) surge.
Twitter ..well there are no more adjectives to describe this one.
Tesla rose after a China Daily report said the maker of electric cars would look to launch additional showrooms in China in 2014.