The Dow Jones scored its second straight record finish but the momentum wasn’t broadly shared. The S&P500 struggled to advance, but still notched another green close above 1,540 so you gotta tip to your cap to the bulls here for holding onto the gains. Most importantly today if you ask me was that the various gap ups in key index & sector ETF’s held. SPY, QQQ, XLF, & XLY are just a few that gapped up on Tuesday and so far are holding the lows from the base of the gap higher. This may not seem like a big deal, but many times gaps higher get sold into (just ask AAPL) and this hasn’t been the case so far so I consider it a positive.
The best argument I have for the bullish case pertains to the VIX. At 13.53, the VIX is still 10% above its year-to-date low of 12.08. That is a potential 10% drop to a new 52 week low that would be a catalyst in pushing the overall indexes higher. Lots of traders are waiting on the S&P500 to join the Dow in moving to a new all time high (that level is 1,565) and the VIX still being 10% off of the lows is a good thing when determining if such a move in SPX is realistic.
For those of you who are angry at the world and just don’t want to enjoy the uptrend, I’d wait for today’s low to be taken out in SPX before getting short. Below today’s low of 1,538 and you could realistically target a pullback towards 1,530. I’m in the camp though that we see all time highs of 1,565+ before any type of meaningful pullback occurs. If SPX drops convincingly below 1,530 then I’ll reevaluate my stance. Overall today was pretty ho hum as far as I’m concerned but I expect they get more lively before the week is over.
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