The market continues to perform well, despite all the top pickers and “sell in May and go away” pundits. The market has been in an uptrend since June, and while it took its time to get back to the highs, it indeed did just that, even breaking them by just a smidgen. The bears are withering, but they can still be heard as they wait to bounce on any signs of weakness.
There was some apprehension ahead of Bernanke’s speech at Jackson Hole last week, which pulled down the broad averages. We are now setup in a bull flag pattern, which is a bullish continuation setup. This bodes well for a push to at least the highs on the year, and probably to the May 2008 highs at 1440 basis the S&P 500. From there, the next stop would be the all-time high at 1576, but one hurdle at a time.
The NASDAQ 100 is out in front here with a decade+ high being hit recently, and like the S&P 500, it appears to be in for at least one more push, with a next target up at the 3000 mark. That’s a nice chunk of % change here, and it will need the assistance of buyers moving into tech.
The Russell 2000 is lagging the other majors, but with seasonality kicking in sooner than later, if the market stays firm, the small caps should outperform. For now, they don’t have to lead, as long as the NASDAQ is out in front, or at the least, keeping pace with the broad market.
Sector wise, I’d like to see the Broker/dealer index act better, but as of now, it’s continuing to churn more than anything else. The market can move out without their participation, but it’s always a good sign to have all the financial groups on board. The Banks are looking “good enough”, and I’ll take a specific look at some of them in another post.
Whether the bigger targets are achieved or not, it looks like we’ll be seeing some upside in the short term.
Michael “tiny” Saul has been trading the financial markets for 16+ years, and educating traders for the past 12. Tiny lives in New Jersey with his three sons and wife of 13 years. He does not have a nanny.
Tiny can be found ranting and raving on his blog, Tiny’s market view at www.tinystmv.blogspot.com as well as his educational website at http://StockMarketTrendsX.com. Follow him throughout the day on twitter at @tinyreal and become a friend on Facebook at facebook.com/stockmarkettrendsx.