From the Trading Desk

Dow Leads Major Averages Higher; Tech Stocks Dominate in After-Hours

The real story was the moves large cap tech was making after posting earnings. It was the Dow who led the market higher today. Transportation stocks enjoyed a nice bump up nearly 1% as a group. Volatility dropped 4% as selling just never picked up any momentum. Volume was down on the session, but look for volume to increase given the reaction in techland. On the downside, CELG has weighed down the entire biotech group wiping out more than 30% of its value in a week. We still have an uptrend despite some selling in the NASDAQ this week. We must remain disciplined and continue to execute our risk management process. There is no need to play hero ball.

Bullishness has ticked up week over week with the AAII survey showing nearly 2% finishing the week at 39.6%. Bears jumped 5% and ended the week at 33%. The biggest move comes with those who were neutral dropped almost 7%. Finally, we see those who were neutral below 30%. We simply have not seen those who were neutral move to either camp. NAAIM managers are still on the bullish side, but not near 100% exposed to the long side of the market. There were some bearish bets placed, but it does not come as a surprise with the action we saw earlier this week.

It would be welcomed to see some sort of 5% correction. The deeper the better for us as we need to see a longer consolidation period. This would allow for powerful chart patterns to emerge. These slow gains are fine, but we’d prefer something much more powerful. With that said, this market still looks okay. Given where the NASDAQ will open the only thing we would want to avoid is some sort of reversal closing below the midpoint of the session. Otherwise, closing out near the highs with strong gains would signal this little consolidation period will resolve higher. Keep an open mind and go with the flow.

We hope you had a great week of trading. We’ll see you back next week.

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