Retail and Energy Lead the Market Higher

The S&P 500 index close up 5 points at 1891 and another new high. The NASDAQ index up 8.5 points to 4276 and well on its way back to the previous highs. The Dow index gained 39.7 point to close at 16,572 and only 16 points from a new high. So much for the sellers having control of the trend. The upside resumes and the only question is how much and how far will it run? Earning will start next week, and so far so good on the economic data.

The ADP jobs report showed 191k jobs gained in the private sector. That is the best in three months for the indicator. Factory orders also climbed 1.6% and much better than February which declined 1%. The outlook remains positive for the data as tomorrow we get the ISM services data. Retail climbed 1.4% in trading offering at least some positives in front of the data. 

Moves worthy of NOTES:

Retail (XRT) gained 1.4% on the day to lead the sectors on the upside. Scanning the sector there were plenty of reversals off the recent lows in the sector to show some positive momentum. Gamestop (GME) broke through the $39 resistance and has gained more than 10% over the last week. Digging into the sector is worth the exercise to find the leaders short term.

The VIX index shows the lack of volatility in this market currently. That is a positive sign for the buyers as they continue to control the direction as well as show positive momentum.

Telecom (IYZ) broke to a new high on Tuesday and held the gain today as the sector remains a leaders short term. EGHT is moving towards resistance at the $11.50 mark and on my watch list for an upside trade opportunity.

Semiconductors (SOXX) gained 1.6% on Tuesday and struggle to break even today. The leadership from the sector remains one of the bright spots for the broad markets. Watch to see how it plays out from here and scan the sector to find the leading stocks. .

Energy is breaking higher and the energy related REITs are move as well. XLE broke through the $88.50 level and is heading higher as money rotates into the energy stocks. XOP, IEZ and IEO are all breaking higher relative to the sector and positive pattern breaks. BWP is attempting to break from a saucer pattern at the low. CQP is in position to break from a bottom trading range as well. This is a sector worth our attention looking forward as the upside and pattern breaks are very positive.

How do we adjust and/or use the current data to help currently?

Started the quarter with a bang and reversal on positive economic data. This setting the stage for earnings as the follow through on the initial rise. The rotation is taking on some more twist this week with the addition of the energy sector. As stated above the breakouts are positive and worth our attention going forward.

The movement from growth to value stocks has stalled for now, but the Dow (DIA) is in position to break higher as money continues to rotate, but at a slower pace. Small caps (IWM) remain in a positive trend off the bottom. Global markets (EFA) are hitting against the previous highs and Europe (IEV) is the the primary benefactor. We are just getting started and I expect the fun to create volatility and opportunity.

Go to the Daily Trading Notes for more details of our strategy for the trading day.