The majority of stocks closed higher last week as breath improved across all sectors except energy. New highs vastly outnumbered new lows on Friday, despite the lack of participation overall. Investors and traders return from Easter and Spring Break vacation this week.
GDP surged above 3.2% in the recent report, surprising downbeat Keynesian economists yet again. Krugman and other “experts” are constantly bombarding the financial media with a barrage of negativity. It leaves one to wonder why they get paid so much when they are so wrong in their opinions. It’s better to follow price and market signals.
New Highs Minus New Lows – NYHL
The number of new highs spiked to levels similar to November 2017, as this measure of market breadth improves. The signal is bullish.
Junk bonds rose to new highs while the number of advancing stocks outnumbered decliners by a wide margin. The lower two panels in the chart above suggest follow-through into the first week of May.
All things considered, an approving economy assists consumer discretionary stocks, so it should be no surprise that most of the stocks in the XLY sector continue their bullish trend. Media and Communications (XLC), Financials (XLF), and Technology (XLK) stocks are also extending their bullish momentum.
The Industrials (XLI), Transports (IYT), Biotech (XBI/IBB) and Healthcare stocks are additional sectors to focus on this week. These industry groups pulled back recently. They also show signs of buying activity, which could parlay additional gains into equity markets.
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Futures are flat this morning and beginning to show signs of retracing back to Globex highs into the Opening Bell. The FED reports on Wednesday.
Stock market attention turns to Alphabet (GOOGL), Boeing (BA) and Walt Disney (DIS) today, with Apple (AAPL) on Tuesday.
Many top companies are reporting earnings this week, with several in or near buy zones, including Google, which boasts a best-possible 99 IBD Composite Rating and is in buy range.
Join us today in the trading room for our LIVESTREAM broadcast during market hours, as we trade stocks in the best performing sectors into and around earnings season. Watch, listen and trade from 9:20 AM to 4:15 PM Monday through Friday.
Happy Trading,
Vinny
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