A nice snapback this week for many leading and once leading stocks with Financials, Energy, and some Tech doing well. The SPY jumped back up near recent highs and could move into new highs from here. We've been adamantly firm on our position that this market wants higher and that we're on the precipice for a new bull market on the horizon. What you're seeing right now is usually the onset before the market goes into a giant melt-up. A melt-up is known as market action where stocks don't quite go parabolic but rather they just steadily start creeping higher. It's also known to be a very frustrating market because buy-the-dip buyers have a hard time getting in on positions as the market melts away higher with very little pullback. We're not quite there obviously, but what is happening is that the market has nearly retired it's former phase of heavy volatility. You see, as we creep higher on the major indexes like this, the air up here becomes thinner and thinner, in the sense that there are less losers here than when we were experiencing heavy volatility drops. Plunges beget more plunges and essentially require bases to build out consolidation ranges for stocks to build something stand on. This is why you get so many double-bottom formations, inverted head & shoulder patterns, cup & handle formations and then of course the retest phase of all those patterns. Once we pass through all that volatility of churning heavy supply and really working through supply-excess... the market starts to breathe easier. It's like a car driving up a steep hill, once you get to the top of the hill the rpms/vix can chill out and breathe more smoothly Hardly anyone is losing money when markets are making new highs and so there's less volatility. Right now, we're looking to be in the next phase where markets are nearly all done with the heavy puking
With out question the leading index are those with the mid caps, financials, materials, steel & healthcare. Some semiconductors are performing strong as well. Let's take a look at the strongest of them at the moment, DJIA & IWM.
So we have the IWM & DJIA that have been taking off to all time new highs, meanwhile Tech on the QQQ are still range-bound. We expect this will play catch up soon, but for now it's in languish mode.
Now let's move on to our current watch list contenders for Momentum stocks we're considering for an entry. This is a short list but some of the strongest patterns showing up presently. Some of these we already own but most are new stocks we're considering as the next rotational stage as we continue further alpha.
We will be running the BotTrigger signal sauce on all these as they develop throughout the day/week and may be taking a position relatively soon. As always, Members will be notified of our formal trade alerts via mobile.