S&P 500 Index Closes at New High Again

The S&P 500 index breaks through the 2000 mark and closes at a new high. What does it mean? More symbolic really as the uptrend is still in play both long and short term. The bigger question is leadership within the index and can it sustain the current trend? The consumer services sector has taken on renewed conviction on the upside providing some much needed leadership as technology has fallen off the pace of late. It seems misplaced for the retail sector to be driving higher following a miss on retail sales for July and earning not providing much in terms of a positive outlook. There are pockets of retail doing well, but the overall outlook is still questionable. However, retail (XRT) broke through resistance and completed a cup pattern above the $88.60 mark. The short term trend off the February low is still positive along with some sizable volatility on the way. All said, we are finding a way to get it done and at the right time the sectors are adding just what the broad index needs to keep the upside in play.

SP500

The chart below is a scatter graph of the S&P 500 index (white) and the ten sectors of the index plotted against the index. You can see healthcare (orange) is still leading thanks to biotech and pharma adding to the leadership. industrials (blue), consumer services (pale yellow) and financials (green) are helping lead the way as well. Utilities (purple) fell today stepping out temporarily from the upside leadership. Energy (pale white) is gaining again after lagging off the low. This shows my point above graphically of how the leadership even in this short period of time has rotated to keep the upside in play for the broad index. As long as this continues the upside remains in play.

SP500Scatter

The NASDAQ 100 index was one of the leaders off the low on August 7th, but it is showing some signs of slowing currently. The large cap stocks can’t seem to maintain the upside moves. Amazon jumped today on acquisition news that got positive grades from analyst and gained 2.3% to break above resistance at the $336 level. Priceline, Netflix, Google and Apple all held their own, but were not able to make strong moves higher. This has my attention currently and it is something to watch going forward. If the leadership shifts watch for a test in the broad market overall. I still like the upside for the index short term, but there is reason for caution.

Running the scans for leadership on the day it was a mixed group of those that have been around the leadership and those who jumped back into the picture today after being absent. The Russell 2000 small cap index enjoyed a solid follow through to the break through resistance yesterday. Plenty of room to move higher for the lagging index. Miners gained on the modest move higher in gold. Energy broke from the consolidation pattern and added to the upside again. Crude oil was up modestly, but failed to hold the move above $94, but worth watching as well.

The durable goods number was better than expected today gaining 22.6% and giving the markets an early boost on the data. Airplane orders were the catalyst and Boeing the benefactor. The all important business investment numbers are expected to be positive the second half of the year and equally a bright spot for the outlook of the economy. Consumer confidence climbed to 92.4 and well ahead of expectations. Maybe that fills in some of the blanks above on the retail sector taking on a leadership role.

We take one more step forward and keep the trend on the upside. Take what the market gives and focus on the task ahead and not the noise from the media and talking heads.