Markets Fail to Drop as Breadth Improves – Infrastructure Stocks are Hot

Steel stocks

The bears were looking for the markets to fail, yet most measures of breadth show improving data. The Bulls have been persistent in their buying activities, as the number of 52-week highs overtook the number of 52-week lows. NYMO and NAMO are also improving. Additional measures of fear and complacency moved slightly to favor a bullish scenario.

Infrastructure Stocks Catch a Second Wind

Steady buying continues in the stocks most closely associated with rebuilding the damaged Texas infrastructure. VALE saw continuous bullish “sweeper” activity, where large blocks are broken up to help disguise large investors activity. Chart courtesy Wall St. Jesus.

VALE Sweeprs

Alcoa (AA) and Century Aluminum (CENX) also show repeated bullish flows, while steel stocks like AKS, VALE, and Cliffs (CLF) experience similar price action for several days following the storm’s aftermath. All of these stocks are strong in pre-market trading, US Gypsum is strong in pre-market trading for a 4th straight session. FSLR and solar stocks are improving as well.

NYA-bullish-08-30-2017
The NYSE Hi-Lo percent is improving, swinging upward from recent extremes. New highs are expanding.

RSI and Stochastic are improving as well, signaling 11,700 support will hold for another day.

Markets Fail to Drop – SPY

SPY bounced hard on Tuesday, as news out of North Korea failed to impede the bulls progress. Buyers stepped in to support the 243.50 zone (shaded area) in the chart below.

SPY daily 08-30-2017
Volume by Price (VBP) at the 243.00 to 244.25 (+/-) zone held and remains support in the short term.

TICK cumulative is flat, trading sideways now for most of August. This type of action is usually rotation, though we have to be mindful of the possibility that this could be institutions dumping laggards (distribution) in the short term. So long as TICK does not cross lower, the trend is intact.

MACD is beginning to show signs of improvement, with histogram bars heading towards the zero line. If this continues, it will confirm that bears have lost control. Stochastic is rising with price.

Seemingly unrelated industry groups in the financials, technology, and healthcare sectors are strong this morning as well. Biotechs are showing signs that they could continue higher.

In addition, many of the current week and previous weeks watch lists are primed to move higher. Be sure to check them out this morning as the Opening Bell nears.

We’ll be “LIVE” at 9:15 AM to discuss the markets. Until then……..

Happy Trading,

Vinny



 

 

Vinny Gambini

Trade Fundamentals w/ Technical Analysis - CANSLIM method using high probability setups and Ichimoku Trend Analysis. Architect, Family Man and Father of three.