The Dow climbed higher due to DD as the company is going to split in two. Biotech once again was hit hard as sellers continue to pound the group. At one point today at the lows the NASDAQ was down more than 1% on the session. By the close, the NASDAQ was able to climb back to the mid-point of the session. Not overly bullish, but we did not close at the lows of the session. While we remain in an uptrend it certainly is not convincing just yet. We need more from this market, but we will act accordingly to what we know not what we think. Right now, we are in a confirmed uptrend and will operate as such.
We have our old leaders like NFLX, AMZN, and FB setting up along with GOOGL who is now trading under the name Alphabet. What would be nice is to see new leadership form alongside our stalwarts. EPAM is a current holding pushing higher which is nice to see. The only problem is we certainly need a lot more showing up and producing signals. It is highly unlikely this market would run away from us without producing high quality signals. Sure, we will get a few low quality signals. Overall, we should start seeing signals becoming more frequent and of high quality.
One issue we have talked about before is the rise in the US Dollar. The dollar index has stalled out since hitting a high in March. Currency has been a drag on earnings and continues to be a main excuse for missed EPS. Let’s not forget how much multinationals have benefited when the dollar was weak. Without the Fed raising rates the upside pressure keeping the dollar at these levels has quickly diminished. Today’s move in the dollar index suggests the currency is about to weaken against its peers. Most notably is the Euro. EURUSD currency pair appears to be ready for upside momentum. It will be interesting to see how this plays out with the next Federal Reserve meeting this month. Will the currency markets sniff out another round of quantitative easing?
Cash is still king, but as signals pop up we will execute our strategy. We want to be in a position of power, not weakness. We are somewhere in the middle. Stick to the plan.
