Homebuilders and Financials lead the market higher as traders shake off the impending disaster facing Europe. Buyers stepped up their operations in the early going and continued with them until the one o’clock hour. Heading into the release of the beige book the market turn a turn lower fearing what the Fed may or may not say. Volume rose on the day, but failed to explode higher. After the release the market was able to find its footing and push to the highs of the day closing at the highs. Day 3 of another attempted rally produced a follow-through day and we’ll now adjust and act accordingly. While this day could have been better it certainly wasn’t all that bad.
June follow-throughs are not likely to succeed. Only one has been successful and that was June of 1992. Odds are not in the bulls favor here as we continue to push forward. It wouldn’t surprise me to see distribution hit the market sooner rather than later with the macro picture. Given the current price and volume action of the market it appears the market is poised to push higher and it is prudent to follow.
There were a few leading stocks pushing higher, but many of them had huge price gains today. It is hard to get into a stock after it pushes 5-10% higher in one day. This isn’t 1999 when a jump of this magnitude was the norm. Unfortunately, the type of market we saw in 1999 only comes around once every few generations. It would be nice to get a new crop of leaders to show us this rally attempt has some legs behind it. It isn’t out of the question this market can’t climb back to its 50 day, but gaming where the market goes will be fruitless. Follow price.
A rally does appear to be underway and how far and long it will go is anyones guess. Allow price to be your guide! Cut those losses short.