The S&P 500 failed to hang on to 2000, but it still closed in all-time highs. Over on the NASDAQ the index hit a 14 ½ year high. Volume on the NASDAQ was higher, but lower on the NYSE. IWM remains well below its all-time high and has a bit of work in order to retake its old high. It is hard to argue with a market hitting all-time highs. While today’s close was not all that great we did not close near the session lows. Leading stocks continue to act well leading us to believe even with slight pullbacks this uptrend has legs to continue.
It would be really easy to come out and call a top here. We do have overbought conditions, elevated price-to-earnings ratios, and even a tired “bull market.” If you see someone calling for a top they are simply trying to be known for calling a top. There is no magic formula or telltale sign this market is about to or has already topped. We need a pile up of distribution and a lot of selling in market leaders. Even then, we have seen the power of QE and ZIRP keeps this market afloat. The Federal Reserve is set to end QE this October and is not likely to raise rates until next year. Therefore, it is quite silly to be confident in calling a market top. Not to mention we simply do not have the evidence to support calling a top. Stick to the process and ignore the market pundits.
We have been keeping an eye on IBB and XBI looking for a breakout. Today we got a strong breakout with some volume. While could complain about the lack of above average volume it was a Monday on the last week of the summer. Staying patient is very important and allowing your prey to come to you is very important. We will continue to pay attention to potential breakouts and get aboard.
This was a nice start to the last week of summer. We will continue to shed losers and hang onto our winners.
