QQQ, the ETF that tracks the NASDAQ just completed a 9 day winning streak, matching its best daily winning streak of the last 3 years. With this winning streak key names have refreshed their charts and look poised to continue leadership at least in the immediate term. Chief among them are GOOG, PCLN, & AMZN. AMZN closed at an all time high on Monday and PCLN at a fresh 10 year high, $1000 is starting to look like a magnet for both PCLN & GOOG at this point. Given the gravity defying rally, you’ve got to respect that buying the dip worked again.
Most will still focus their attention on SPX 1,650, and rightfully so, but the next couple of weeks look like a sweet spot for tech with heavyweight earnings still 2 weeks away. Big banks start reporting later this week so I’m not as favorable towards XLF/SPY as I am in general when it comes to techs. In addition, if you look at the big banks like BAC, C, GS they’re still struggling to regain their footing above recent lower highs. JPM is the only one that stands out to me as having some upside momentum. Some may view this as a potential catalyst, that is if banks get going then the market breaks even higher. Others might cite their lagging action as a reason to be skeptical of the rally. Myself personally would rather do neither and just focus on the breakouts that are happening right now, and that’s in tech and the Russell 2000.
The Russell 2000 notched another daily close above the 1,000 level for just the 2nd time in its history. Even better is that 2nd close ever was the 2nd in a row, showing a continuation behind Friday’s momentum. While I acknowledge that a level like 1,000 is going to continue to be a hurdle, and QQQ’s 9 day winning streak is extended, the backdrop seems safe to start buying dips again at least in the immediate term. Key support on SPY becomes previous resistance at $162. Key resistance is $165. With the VIX back below 15, expect to see fewer of these gaps up that have been occurring but rather look for the move to develop intraday.
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