Market and Sectors Continue to Hit New Highs

Buyers continue to find interest in owning stocks with the NASDAQ index leading the way higher. The index gained 17 points again today closing at another new high. Semiconductors were the leader gaining more than 1% on the day and hitting a new high as well. The leadership remains consistent for the index overall and outlook bullish. Just another day at the office…

Financials as a sector have been moving sideways and consolidation the last four days, but the large and regional bank sectors have taken on a new push to the upside from earnings and upgrades to the outlook for profits. Even the brokers have enjoyed some renewed efforts on the upside the last couple of days. The laggard in the sector remains insurance stocks, but I would expect them to pick up as the year proceeds with the rise in interest rates helping their portfolios relative to yield and upgrading products. Still one key sector to watch going forward for leadership.

Small caps are still moving higher with the Russell 2000 index moving to a new high as well. The biotech sector has been the big contributor for the broad index as the sector continues to find interest from buyers. Scanning the biotech sector shows the significant moves higher as investors plow money in. The 30 DMA is still the level to watch for support if the current trend reverses.

Energy continued to add to yesterday’s gains and helped move the sector back above the 50 DMA and establish a trading range that has been in play since October. The oil services and exploration sectors are attempting to bounce of the recent lows and establish a trend change as well. Crude oil was up $1.76 to close at $96.73 and pushing back towards the $100 level. The speculation in crude is being driven by a projection for increase in global demand. Natural gas has moved back above the December highs gaining 4.5% today and adding to the upside momentum in the stocks. Natural gas stocks also broke through resistance are in position to retest the highs from October.

REITs cleared the next level of resistance on Tuesday and followed through today with a modest gain. The key for the sector is the stability in interest rates. If we continue to see rates hold below 4% on the thirty year Treasury bond it will help the outlook for the sector overall. We continue to own the sector short term and would look for an opportunity to add to the sector going forward.

The global markets remain in sync with the US markets overall. The EAFE index has moved back to the December highs and with Europe stocks improving it is looking positive going forward. China Finally made a move on the upside gaining 2.3% off the recent test of support. This also hit the entry point for some trade opportunities in the country. Overall I am starting to warm to the opportunities in global markets, but I am willing to be patient as this unfolds and remain overweight to US stocks.

We can chalk up today’s trading to the positive side, but remain cautious about the downside risk. As we discussed yesterday the sellers are still alive and well… looking for just cause for the markets to sell off in earnest. Whatever the near term outcome we have to go with the trend, but respect any trend changing events near term.