Regardless of what I believe to be true about the market, it is what the market does that matters. No war in the Ukraine will change the outlook fundamentally to the US markets, and thus, we are bouncing back from the recent selling and making our way back to the previous highs. You can’t argue with the results, but you can be cautious about the risk. We have posted entry points for buying positions based on the move Monday and we have followed through in several sector to add positions. Regardless of the reason we have to stick with the trend for now. The test is not likely over, but the bounce is in play for the trades posted.
Moves worthy of NOTES:
Russell Small Cap index (IWM) held the move higher today gaining 1.4% and index closing at 1203 which is a solid follow through back above the 1181 level. If the small and mid cap sectors continue to add to the upside the move has legs, at least for the short term.
S&P 500 index moved back above the 1850 level on Monday and held today into the close at 1872. Technology (XLK) led the charge for the index gaining 1.3% again today. Tech is taking the leadership role and the semiconductors are out front on the move. SOXX is already at a new closing high on the bounce. MLNX broke from consolidation, POWI and SNDK hit new highs, HITT had big breakout move as well, there are plenty of pattern trade set ups in the sector as well worth watching going forward.
Healthcare gained 1.1% and moved through out entry point of the S&P 500 Model. The providers (IHF) gained 1.6% on the day and are in position to move to a new high. Pharma (IHE) was up 1.6% and biotech jumped 2.6%. This was one of the previous leaders and in position to reestablish that role again.
Telecom up 1% and back to the previous high. The removal of fear relative to Russia remains the catalyst for the markets overall. News remains the catalyst and that is a double-edged sword.
Global markets continue to track along with the US markts as the EAFE index (EFA) pushed higher again on the day, but still has some work to do to be convincing on the bounce. Europe (IEV) is still leading the way for the global outlook. Emerging markets (EEM) were up 1.3% and is pushing its way back towards the previous resistance.
Volatility index (VIX) continued to decline with a move to 14.5 after a climb above 18 on Friday. The solution in Russia is removing the anxiety short term from the markets overall. Case solved for now? For now, but we have to keep an eye on the issues still facing the broad markets.
Last night we discussed scanning the leading sectors for setups today… they played out well on stocks like MXWL and SNDK in the semiconductors sector. Healthcare produced WLP and ABBV. Keep digging in and finding the leading stocks that offer the best trade opportunities. Remain patient and let the market gain clarity to take us to the next trend… up or down.