Positive economic data kicked off the session, but traders weren’t ready to bid up stocks and keep them at session highs. Led by the NASDAQ 100 the market closed mostly lower in light trade. Today was the first session of the summer season and volume lived up to its summer tradition. Do not expect volume to surge any time soon as summer is notorious for light volume. As far as economic data goes existing home sales were better than expected as well as US manufacturing. It is nice to see positive economic data, but the market simply ignored it today. Consolidation days are bound to happen and are needed if this market is to push higher. Another day or two wouldn’t hurt us as long as we avoid any nasty distribution. This uptrend we are in remains in place and we are continuing to stay on top of it.
We continue to find stocks rounding out and setting up within bases. Whether the stocks we see are in handles or simply forming their right sides of their base is a positive. Since we are finding so many stocks it is not the time to take the summer off. It is important to this rally we find stocks supporting the rally by breaking out and running. Not just run a few points here, but take off like a rocket. Two big stocks are currently in handles are PCLN and GOOGL. Big institutional players love big liquid names like GOOGL and PCLN. They offer liquidity and big potential runs. Keep an eye on these stocks as they will, if they breakout help this market push higher.
Bear talk continues to quiet down, but the usual suspects continue to squawk over a potential disaster coming our way. Volatility is quite low and what we have shown in the past tops are marked with big volatility. Since we have tight trading ranges and thus low volatility this market can continue to march higher. How high is anyone’s guess and the market will give its clues if a stock market top is near. One thing we know is volatility will begin to march higher and it is likely we’ll experience a quick sell off. One example is June of 2011. Another point would be distribution days would pile up on the NASDAQ and NYSE. So far, we have yet to see any harsh distribution days. For the bears out there: “a watched pot never boils.” We intend to squeeze as much from this rally as possible. Getting out too soon and worse going short would go against our process.
Not a bad way to start the week and we’ll continue to look for breakouts.
