As volume did expand today stocks were able to find support and avoid any nasty distribution. While the S&P 500 remains just below its all-time high the NASDAQ has tightened up considerably over the past few trading sessions. Our volatility ratio has reflected this and is a positive sign for further upside. This market will continue to test the patience of many with its low volatility and low volume environment.
The last time the NASDAQ composite saw above average volume was on the 15th of May. So far, the low volume hasn’t deterred stocks from moving higher. Regardless of whether or not we have volume, price continues to act pretty well on the long side and we’ll continue to roll with it.
Strength continues to lie with the S&P 500 and the NYSE Composite index. Small caps continue to be the forgotten child even though many of the Russell 2000 stocks have taken a beaten. We’ll leave the bottom feeding for the ugly. If there are any turnaround opportunities we’ll be on top of them. For now, it appears it is few and far between. We’ll be focus on the strength which is in the NYSE Composite constituents.
For the second straight day bond yields have been pushed higher. The 10 year sits just below 2.6% after a roughly 20bps move in a few days. It is quite the move and you have to begin wondering if the bond market is beginning to sniff out inflation. Stay tuned. For now, we just saw a big rally at the long end of the curve and we’ll see how it progresses.
A look at how 2014 has gone so far is quite interesting. The top 50 stocks with the greatest YTD performance (FINVIZ stock screener) is a fascinating list. Healthcare dominates the list, but a big chunk of the gains came from Industrial Goods. For the top 50 here is what sectors they are coming from:
We then took a look at the average percentage gain for the top 50 broken down by sector:
The top 5 stocks for 2014 are:
ICPT 243%
PLUG 183%
ITMN 165%
BLDP 151%
FURX 147%
For the entire list subscribers click here.
This week is off to a quiet start and while some folks want fireworks every day. We believe a little consolidation is healthy for the market to progress forward. If it turns for the worse we’ll reverse gears and go with the market.
