Stocks are Breaking Out
Despite the weakness in the major U.S. Indexes, most of the stocks on the watch list exhibit relative strength. In addition, relative strength (RS) lines on many of the recent MarketSmith alerts are charging higher. IBD 250 Growth stocks host a multitude of breakouts and gaps higher over the past two weeks.
If this character remains, the S&P500 Index and QQQ should follow.
S&P500 Index – Relative Strength
SPY is tracing out a symmetrical triangle, as price action marrows along its flat 50ma. The relative strength we have seen recently suggests a bullish outcome. Advancing stocks have outnumbered declining stocks, with advancing volume confirming. SPY is at 268.00 (+/-) in early trading.
Relative Strength – Breadth
New highs outnumber new lows, with breadth improving across many metrics. If new highs continue along its current path, the S&P500 Index (SPY) should follow.
The McClellan Oscillators for NYSE and NDX are bullish. The NYSI and NASI Summation Indexes are bullish as well, crossing upward this week.
If stocks continue breaking out, we should test recent pivot highs over the next couple of weeks. Failed breakouts would signal lack of interest.
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