Market Breaks Through to New High

Strike up the band and let’s celebrate the S&P 500 climbing to a new record. Is this the break we have all been looking for above the nearly three month trading range? Based on the close the answer is yes, but it still has work to do to confirm the move. Being that the “little market has cried wolf!” all too often of late it is hard to be a big believer in the move. The index gained over 1% on the day with the NASDAQ 100 index declared the big winner up 1.5%. This was a large cap stock rally as the Russell 2000 small cap index eventually gained 1% on the day, but it went kicking and screaming all the way. The VIX index fell back below 13 and continues to reflect little concern in terms of the worries that have been in the headlines for months. Nothing changed on the economic front, it is simply buyers willing to commit the funds to the market currently. As I always say… take what the market gives and keep looking forward.

Interest rates fell to start the day and helped the initial move higher for stocks, but rates ended the day higher keeping the streak alive for the Fed to hike rates as the year progresses. I am still a believer that yields are ahead of the Fed on this issue relative to timing and aggressiveness by which rates will rise. Again it is not our job to speculate, but to track the trend and invest accordingly. I am still looking for a pause or consolidation in the yield near term at the current levels.

Filtering through the NASDAQ 100 for leadership today we found the following:

  1. Software (IGV) broke through the top end resistance and is one of the leaders we have been tracking. The break higher keeps the uptrend in place and offers some leadership to the NASDAQ as well as the technology sector overall. MSFT, SYMC, ATVI, ADBE, INTU and FDS were some the key leaders on the upside.
  2. Apple (AAPL) broke through the near term resistance at $127.50 after testing lower. Could be one of the keys to the upside movement near term.
  3. Technology (XLK) was up 1.6% and back at the previous highs. Follow through would be a positive for the near term. Netoworking (IGN) like software, was another part of the upside pressure. Semiconductors (SOXX), social media (SOCL) and internet (FDN) also contributed on the day.

Filtering the S&P 500 index we found the following of interest:

  1. Refiners Tesoro (TSO) and Valaro (VLO)  broke from consolidation and is heading higher again as the outlook for the sector remains positive with crude creeping higher.
  2. Industrials (XLI) are taking on a leadership role as we discussed. With a modest gain of 1% for the sector, the stocks were better on an individual bases. IR was up 3% as one of the leaders in the sector.
  3. Healthcare (XLV) was up 1.3% for the index and was second only to the technology sector.
  4. Financials (XLF) was up only 0.8% and still not willing to take on that leadership role that has been pontificated all week. KRE keep the new high hit earlier in the week, but didn’t do it in a convincing manner.

Overall it was positive day and plenty of positives to take away, but the worries are still in place. We just take what it gives and keep rowing our boat one day at a time.

The notes from this morning are here… click the link to view.