The S&P500 Confirmed a Trend Change on Tuesday.
We will discuss the tools we use to confirm the next market direction for the S&P500 and some potential trades as a bonus in the LIVE broadcast this morning.
Summary
Suffice to say, the S&P500 confirmed a new trend has started. Tuesday (MOC) saw AROON UP shoot higher and tag 100. More on useful confirmation signals here.
Price action is back above all moving averages (50ma shown) and the 8 week triangle is history. A bullish breakout and follow through on above average volume is underway.
The Saturday, April 15 Blog Post featured one of “the tools” we use to confirm a possible change in market direction. Therein we discussed our thoughts on Nasdaq 100 (NDX). Below is the updated chart. Note AROON UP pegged 100 and Nasdaq price action never slipped below the 50ma. Volume is above average.
Recent gains have been broad-based, with Apple (AAPL) and the FANG internet giants all leading the charge, so far in 2017. As these growth stocks continue to out perform value stocks, the ratio between growth and value moves higher, as illustrated in the chart below.
As Nasdaq shows persistent strength, opportunity beacons the patient trader.
Lately, numerous commentators on CNBC have started to call for market weakness, siting over valuations, yet markets, NDX in particular, forge ahead. Earnings are beating estimates.
While the dotcom days saw insane valuations, Alphabet’s PE is only 26 and the S&P500 is currently 25.11 by comparison.
Facebook, Amazon and Netflix PE are high, yet we think they can continue higher. Consider this fact; the last time Nasdaq listed growth stocks broke through a key level, was at the turn of the century (2000). Further, an over abundance of those stocks produced nothing but hype. By contrast, AAPL, NFLX and GOOGL produce tangible value.
AMZN is trading in a bullish pattern near an entry, while FB continues to charge higher. Earnings this week.
All of them are in buy zones right now.
The choice seems perfectly clear. Listen to the advice of CNBC “talking heads” or listen to price action, breadth (NYMO/NYHL) and institutional sentiment (TICK/TRIN). We will do the latter, as institutions continue their shopping spree. Also, consider seasonality. April and May are strong months, with a few days left.
Join me this morning in a LIVE broadcast during market hours. Trade with a professional that achieves results.
Happy Wednesday and welcome to our new members,
Vinny