It was quite a mixed session on Tuesday as stocks closed lower on the SPX and DJIA and higher on the COMPQ and RUT. Strong breadth and a late day buying surge definitely helped shape up the closing prices. Volume was well above average and significantly higher today compared to Friday’s levels. If the market would have rallied across the board with this huge volume surge I would think it would be a very bullish price signal. As it is the mixed session left a little doubt to the validity of the volume surge. Still, the COMPQ and RUT led the way and there were many stocks that made very bullish price moves on very large volume.
Most noticeably were NTES ORBK HELE NXPI BABA and a few others. Some of these stocks had no news and some of these names had news that you would not have thought would have produced such an influx of accumulation. This is something that you used to see quite often during uptrends in the 90s and early 00s. You don’t see too much of this kind of price action post-2008 so it is possible that this could be further confirmation to all the strong big rounding price patterns forming out there. My scans continue to showcase stocks hitting new highs, nearing new highs, and bouncing off the lows in big rounding weekly chart formations.
Now, on the very short-term we are tad overbought in the Nasdaq and Russell 2000 and it would be healthy if we consolidated the recent gains on lower volume. This possibility is growing by the session as the equity put/call ratio has come plummeting down from its recent highs. The overall put/call ratio is around .89 not extreme either way. However, the sentiment appears frothy on the very short term as the Consumer Confidence survey came in below expectations falling in May. This is yet another sentiment indicator confirming the other indicators that the crowd while not completely bearish is no where near bullish. At least not as bullish as they should be considering the technical patterns forming in individual stocks.
The market remains in an overall uptrend and our models remain under an operational BUY signal across the board. I have one new long position this evening along with two add signals to two recent long positions. These are posted on the ‘New Positions’ page. Alright everyone have a great rest of your Tuesday. I hope you all had a great long weekend and I wish you a good Wednesday. I’ll see you in the chat room tomorrow. Take care.
