The NASDAQ and Russell 2000 continue to lag the broader market as the Dow Jones Industrial Average takes on the leadership role. Led by MSFT big breakout the Dow added 128 points finishing higher by almost 1% while the S&P 500 closed with a 7.5 point gain. Volume ended mixed with trade jumping on the NASDAQ while falling on the NYSE. There is a disconnect going on and we are now seeing it with leading stocks. We’ll keep an eye out for any price signals our process turns up. Despite being on somewhat unstable ground we remain on this uptrend and will act in accordance with our process.
A few leaders like TSLA and YELP are not acting as well as you would like. Biotechs who have been big winners on the year are now rolling over. CELG and AMGN are currently struggling and in danger of rolling over. SCTY is another high flyer was hit hard today just prior to the company releasing its earnings report. The landscape for growth stocks over the past few weeks has not been all that rosy and now it has become a bit troublesome. TSLA reaction to earnings is not helping the cause.
I don’t hear top callers referencing leading stocks, but I do hear them referencing other tidbits. We can point to the surge of cash into stock funds in the month of October as one thing. The other would be the bubble forming in the Federal Reserve balance sheet. However, the number of bears on the II survey reached extreme levels. For two straight weeks the number of bears we see should be added to the endangered species list. Tomorrow we’ll get a read on the AAII survey and NAAIM survey. I would actually be surprised if the number of Bulls responding to the AAII survey fell below 40%.
Tomorrow we get a read on third quarter GDP. Estimates are for the economy growing at a rate of 2%. It’ll be fun to see how the market and twitterverse reacts to the number. Of course, we’ll just be waiting patiently.
Ride your winners.
