The NASDAQ capped off a strong week of out performance as we finally saw some rotation back into high growth / momentum type of stocks. Today the S&P 500 gained 0.42% but the NASDAQ jumped 0.76%; this continued a trend we saw much of the week. Weeks just ahead of a holiday are generally very light in volume and tend to drift upward in the absence of news so that was par for the course this week. There was some decent housing data:
Sales of new U.S. single-family homes rose more than expected in April and the stock of houses on the market hit a 3-1/2 year-high. The Commerce Department said sales increased 6.4 percent to a seasonally adjusted annual rate of 433,000 units, ending two straight months of declines.
Yesterday we said the NASDAQ made a potentially important move as it broke a 2 month downtrend, but still needed to make a new higher high. Well today we saw the index rip right up to that level it needed. It has had a strong move this week so some digestion is probably needed but this is definitely an important spot as we could have a big change in tone here. Also it would be a positive to see the 50 day moving average slope turn from downward back up (as it remained in the S&P 500 during the entire correction).
Usually we post the NYSE McClellan Oscillator but since NASDAQ has been the index of focus this week, we’ll post the NASDAQ McClellan Oscillator. You can see it is at its first overbought levels since early March – so again, big move this week -some digestion for a day or two would be welcome even if bulls are ready to romp.
Worth noting oil is making another run this week; the last few times we hit this level however there was near immediate failure.
We’ve mentioned Apple (AAPL) a few times here the past 2 weeks; today it continued its climb nicely although it would be nice to see that 10 day moving average climb a bit higher to provide short term support.
Like we showed with stocks like Yelp (YELP) yesterday, the homebuilder ETF (ITB) broke out of a long downtrend today – another example of growth / cyclical groups getting money flows into them this week.
If you believe that history repeats, SentimenTrader.com believes we will have a pause in the NASDAQ shortly:
The Nasdaq Composite index closed above its declining 50-day average for the first time in more than 30 days. It has completed a similar pattern four other times since the 2009 bear market bottom (7/15/10, 9/16/11, 6/19/12 and 12/11/12). All of them saw the Composite fall back immediately, and struggle for several weeks before resuming the uptrend.
Have a good weekend and holiday and we’ll see you back here Tuesday!