Today was just, simply put another good day in the stock market with the Russell 2000 leading all major market averages higher followed closely by the NASDAQ. Volume ended the day higher and it was nice to see volume expand above yesterday levels on both exchanges. The market did receive news inflation was jumping higher than expected.
Inflation was led by the rising cost of food something we all need to use on a day-to-day basis. It didn’t appear to slow the market down much as we continue to see the market favor small caps over large caps. We find ourselves noticing many more potential right sides of bases forming. This is a bullish positive development. Not to mention the current quality of breakouts. It is hard to think we just stop this rally short here. We are going to stick on this trend until this market proves otherwise.
Many are worried over what the current inflation picture will do to the Federal Reserve’s policy statement. The Reserve Bank will find it hard to ignore the rise in food prices over the past few months. However, the Federal Reserve can simply say they have foreseen this inflation coming and are well within their target range. We truly do not have a clue what may or may not be said by the Federal Reserve and subsequently how the market will react to it. At the moment we are full steam ahead and looking to capitalize on this current market environment.
Yesterday within the S&P 500, Utilities were the leading group, but a complete 180 occurred today. Financials were lagging yesterday, but not so today. The group led the entire S&P 500 higher followed by Consumer Discretionary and Industrials. Utility and Energy stocks were the laggards on the day. XLF lacked some volume today, but its price move was certainly positive. A quick peak inside the ETF AXP and AIG look poised to continue their moves higher. Others are wide and loose charts, but given we continue to get free money from the Federal Reserve anything is possible. It is a good sign if we continue to see Financials moving higher.
Tomorrow at 2pm will certainly be entertaining to watch. We aren’t keen on watching Yellen take questions from the financial media. Many others can’t wait for it and headlines are sure to get news scraping algorithms something to churn the market over. While many grind it out and get chewed up we’ll stay focus on our process.
Stick with the trend.
