The S&P 500 Index extended its gains into new high price ground yesterday on lighter volume while the NASDAQ stalled on heavier volume. While the NYSE-based indexes have moved to higher-highs as a result of rotation into defensive and low-PE, big-cap names the NASDAQ has lagged and leading stocks remain mired in corrections, many of them below their 50-day moving averages. The so-called "resumption" of the market's rally has not been accompanied by much in the way of fresh breakouts and pocket pivots among potentially new leading stocks, and for this reason the Market Direction Model remains in a cash signal. We would like to see the NASDAQ confirm the S&P 500's move to new highs but so far it has only been able to regain its 50-day moving average after a 5% correction during March. Typically, during market turns back to the upside over the past year, leading stocks have accompanied the move by issuing pocket pivots or buyable gap-ups, action that is conspicuously lacking here.
The S&P 500's breakout to new highs could very well be a bull trap, and we prefer to sit back and let the market prove itself further before choosing to plunge headlong into the so-called "rally resumption." In our view, caution is still warranted.
This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2018 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.