"Successful trading is about finding the rules that work and then sticking to those rules." — William O'Neil
We got higher, we got lower and we got sideways. It was a whiplash day for the markets that saw record highs be broken right before a painful morning sell-off. Then the afternoon rally brought most of the major indexes back into positive territory and left the S&P 500 at another all-time record close.
The market attempted to rally a few times today but came back to rest at intraday lows. The good news is those lows seemed to be support areas that the bears could not bust below. The two intraday rallies came in the morning and afternoon, the first possibly on earnings reactions and the second on no surprises from the FOMC press conference.
The Nasdaq opened with a gap up but couldn’t hold on, selling off briskly in the morning along with the other major indexes. Eventually positive consumer confidence numbers and continued growing demand outlook from OPEC helped the markets to settle down and end the day with a relatively small pull back overall.
Momentum from the end of last week continued into Monday as markets open the week higher and the S&P 500 and Nasdaq set new records. There are some signs that investors are rotating out of safe bets and buying up speculative positions ahead of earnings reports.
The start to the week was not much of a surprise. Major indexes pulled back from record highs set the previous week. Those highs were from overextended mega-caps and the daily gains were not shared broadly across the market. We were watching for a day with broader gains and higher volume.
The S&P 500 had a slight loss for the week, but there were two sectors that soared despite the market.
Very strong economic data sent the markets higher on Friday as investors shook off the capital gains worries. Small caps took the lead for another session as gains were shared broadly across segments and sectors.
The day started by honoring the expectation we had of a move higher, but a mid-day reversal busted that expectation, erasing the gains and sending prices plummeting. The reason was obvious. News broke that Biden would propose a huge increase in capital gains tax. So we’ll look closely at the impact and what we might expect from here.
The gains were broad across segments and sectors today, pivoting the indexes to the upside after a few days of declines. The only thing that was missing is higher volume that would indicate more institutional support in the gains. We’ll take what we got for now and then keep a close eye in the days to come.
The market continued to pull back for another day as investors begin to absorb more earnings reports. Those results and the guidance not only impact to their respective stock prices but also indicate what parts of the economy are recovering faster or slower.
