Marketview: Choppy Range

a whole pencil used and put back together again in the order which it was used

Post-holiday Trade

Almost everyone was back in the swing of things this week after a long holiday. We returned to see a market hovering around overbought levels and not really willing to budge. The market shrugged off three big negatives this week. Early in the week we saw a weak ISM Non-Mfg report and a minor flash crash in gold. The market non-reaction to these would-be setbacks established the tone for one of the biggest jobs report misses in the last couple years. Again, the broad indices barely budged, and the S&P closed out the week near the top of the range. The trend remains intact. The risk/reward might not be great up here in the nosebleed section, but the market still seems to be in punisher mode feeding off the last of the doubters.

Earlier this week I posted a study where the most common matching markets were mostly originating in the early ’90s, and when I titled the post “Early ’90s Vibe,” I wasn’t kidding. For a second, forget the next wiggle in the stock market. There is massive opportunity and plenty of cash swimming around looking for a home. Anyone aggressive enough to hustle and grab a piece of the action can make serious money in a long-term bull like this. The game is wide open. Most people reading this blog are work in the financial markets or want to make a living in the markets. Opportunity is not restricted to equity and futures exchanges. The objective is always to capture inefficiency and provide value. Trust me when I tell you I’m doing my part. I hope you do yours.


Cumulative breadth continues to make all-time highs.


Breadth among small cap stocks is one of the only measures showing relative weakness:


 Sector Rotation

There is a broad spectrum of sector performance now. Healthcare and financials are dominating the tape. Consumer staples and energy stocks have gone cold.


Trader Imagination

The end of the week saw shades mania creep into the biotech sector with monster gainers like $ICPT absolutely destroying to the upside. Markets sometimes don’t make sense, and if these stocks start to capture investors imagination, more upside and that volatility we like at the top is probably in the cards. Under the surface, biotech has been bubbling for a while now. Bull markets are always on the hunt for the next fix, and this could be it. Professionals know exactly how to bid these into the stratosphere, so don’t expect to fade the hype anytime soon.


Weekend viewing

I’ll be looking to find time to watch this over the weekend:

Full Video:

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