"Successful trading is about finding the rules that work and then sticking to those rules." — William O'Neil
Gap filled. 12,000 support held. New Intraday all-time high. The Nasdaq held a volatile session today that started with a new all-time high in the morning, but quickly turned down to fill the gap from Friday’s open and test the 12,000 support area . The good news is that it successfully held the support and closed not too far from the day’s highs.
The short week of trading ended with a +2.96% gain for the Nasdaq (IXIC), outperforming the S&P 500 ( SPX +2.27) and the Dow Jones Industrial (DJI +2.21%) average. The Russell 2000 (+3.92%) is still outperforming everything as investors focus on small-caps . The major indexes set new all-time highs this week.
Energy ( XLE ) put in a third week of huge gains and topped the other sectors. The sector is up over 40% in the last three weeks. It did pull back a bit on Wed and Fri .
The short trading day after Thanksgiving brought a nice gain for the Nasdaq, but on lower volume . The index gapped up in the morning and had steady gains, until mid-morning brought some selling. It finally turned back to the positive just before close.
After a long period of underperforming the other major Indexes, the Nasdaq finally had a day to shine. It closed at a new all-time high while the other indexes had inside days. Volume was lower and traders focused mostly on buying the pullbacks in mid-cap growth stocks.
The Nasdaq finally blew through the 12,000 resistance level today while the other indexes set new highs. The Dow Jones Industrial closed above 30,000 for the first time in its long history. The buying was broad with two advancing stocks for every declining stocks and included some recovery of the mega-caps after so much recent focus on small-caps .
The Nasdaq continued its march sideways on Monday as the other indexes had gains and the Russell 2000 closed at another all-time high. Investors remain focused on small caps, energy, and industrials as a more positive outlook on the economy is supported by additional vaccine news to end the pandemic.
The week ended almost exactly where it started. A weekly doji candlestick representing a trading range of about 1.5% shows how tightly the market traded to complete an inside week and close within the 0.55% range of the last three weekly closes.
Energy ( XLE ) was the big winner of the week for the second week in a row. Additional positive vaccine news signaled the possibility of several sectors recovering and driving demand for oil and gas.
The market showed signs of nervous investors today likely from a disagreement between the Treasury Department and the Fed. That nervousness turned into a sell-off in the afternoon that ended with the index at its daily lows. We did get the higher high and higher low that I hoped for in yesterday’s update. There were also bright spots among some growth stocks with just over half of stocks in the Nasdaq ending the day with gains. Otherwise, it was a disappointing end to a very sideways week which closed almost exactly where it opened.
