It was all about AAPL today as the technology giant surged more than 3% on above average volume lifting the NASDAQ to its 6th straight positive close. Disappointing manufacturing data out of the Dallas Federal Reserve Bank did very little to deter stocks from rallying into the close. All major averages closed at the highs of the session, but technically the S&P 500 and Dow Jones Industrial Averages did post a day of distribution. Volume on the day, while higher than Friday’s shortened session was below average across the board. The VIX remained tame closing in the green, but still remains quite anemic as sellers continue to stay complacent. Overall, we are in neutral mode here as this market has climbed off the lows made nearly two weeks ago. If we are to rally into the year end we’ll have plenty of time to jump back into the market.
There were a few encouraging signs during the session with stocks like CVLT, LCC, CSGP, NTE, FB, AMZN, EBAY, SSYS, DDD breaking out. Three dimensional printing appears to be a leading industry catapulting a “new” way for manufacturers to produce goods. We’ll need to see continued strength in these names as well as other leading stocks to step up to the plate and lead. Without leadership this new rally (according to IBD) will fizzle out rather quickly.
The transformation sentiment has gone from just two weeks ago is quite astounding. Two Friday’s ago this market was ready to collapse and bearish sentiment couldn’t be higher (VIX said no fear). Now, we are seeing bullishness comeback and the sentiment surveys should be quite interesting to say the least. Price action so far has shown strength and we are eyeing potential long candidates. However, any distribution over the next 1-3 days will be something we’ll keep an eye on. Remember, the NASDAQ is still below its 50 day moving average and 200 day.
Let the market prove its worth rather than guessing whether or not it will! If you jump into the water make sure you have a cut loss plan. Enjoy the trading week.
