Traders get another day of gains as crude oil jumps more than 7% on the session and the market is led by energy names. A sign of strength was certainly the volume expanding day-over-day as institutions were active in accumulating shares. We still remain in a volatile market with intraday swings continue to be quite large. Not to mention we continue to remain locked in a range bound market. At this point many stock market bulls are giddy with excitement, but the truth of the matter is we still remain locked in a range. Until we can break free in either direction with conviction it is hard for us to have much confidence in either direction. While things are looking positive for now, but we need a bit more from this market before we get a clear trend.
One thing many are talking about is a bottom in oil. No one knows for sure whether or not we have hit a low or not. During bear markets you will see these types of snap back rallies. Whether or not this is simply short covering is anyone’s best guess. You would think after dropping more than 50% the chances of low in place is quite likely. The rebound in energy the past two days has certainly helped the S&P 500 and Dow Jones Industrial Average. Look at the breakdown today.
Trying to pick bottoms tends to be a dangerous game to play. At the moment we simply have a laggard group pushing off the lows after getting beat down. Just check out the beat down the Reuters Commodity index has taken.
While the S&P 500 and Dow Jones Industrial Average benefit from the surge off the lows by energy names the NASDAQ 100 continues to remain in a loose trading range. The NASDAQ 100 is not going to see much benefit from energy, but it would get a big boost from big cap technology stocks. AAPL and MSFT make up 20% of the index and with struggling we will need to see institutional support for MSFT to help out the NASDAQ 100. Biotech was hurting for much of the day, but found support and certainly would provide a boost if we were to see AMGN push higher. In the end, the NASDAQ 100 will need help from some titans to push higher.
This market has not been able to break free in either direction. Until it does there is no reason to be a hero and suffer the consequences.
