The news is turning ugly again…
We’re seeing reports of infection spikes in some of the bigger southern states, including Texas and Florida. Even worse, it appears younger people are becoming infected and spreading the coronavirus into the summer months. Re-opening plans continue to get pushed back, and it’s beginning to feel as if no one really knows how long the country will have to deal with threats of yet another wave of coronavirus shutdowns.
Which brings us to the big question I was asked earlier this week…
How long can this rally continue before we need to reassess our bullish positioning?
My answer is simple: If we’re going to get an extended pullback, we’ll know it when we see it. But one simply has not materialized yet.
Let’s go to the scorecard…
Last week’s action was exactly what we needed — a strong snapback move following some profit taking. The markets surged right back toward their recent highs confirming the strong trend we’ve enjoyed since the March lows.
Bottom line: There’s no reason to fight the market right now!
Now that the Nasdaq Composite has topped 10K, we can begin to look to some of the Dow and S&P names that have yet to enjoy a “full-V” recovery move.
The S&P 500 is in a particularly strong position right now following its sharp June pullback to 3,000 — where it promptly bounced, confirming this important support level.
The next stop in this range is 3,200 for the S&P. If we can get there, that’s just one more step toward a full recovery. In the meantime, your best move is to stay long and strong!
Keep it In the Money,
Chart of the Day: FAANG’s revenge
Stocks continue to stair-step higher this week, and some of the usual suspects are beginning to come out of consolidation patterns and push the averages higher.
The infamous “FAANG” stocks are seizing the day and taking their rightful place as market leaders once again. Apple Inc. (NASDAQ:AAPL) pushed to new all-time highs yesterday as the stock rides the wave from this week’s developer conference. Shares are up nearly 65% from their March lows, making it one of the best performing names in the S&P 500 year-to-date.
Apple wasn’t the only mega-cap tech name filing new highs this week. In fact, Amazon.com (NASDAQ:AMZN), Netflix Inc. (NASDAQ:NFLX) and Facebook Inc. (NASDAQ:FB) have all posted new all-time highs this week. The only straggler of this powerful group is Google, which is still sitting just shy of its all-time highs posted in February.
Let’s take a closer look at the Facebook breakout:
Facebook’s breakout was especially clean yesterday as the stock jumped above $240 and cleared a range that had trapped shares since last month. FB is now up staggering 75% off its March lows. It doesn’t get any stronger than that!
Trading Tip of the Day
“It’s easier to row down river than up river”
– Jim Dines
We’ve experienced an impressive market rally recently, which has led to every single financial pundit asking the same question: Doesn’t the stock market need a break?
Markets always need to correct (eventually). But that doesn’t mean you’ll be able to accurately spot a turn before it begins to materialize on the charts. Ultimately, your best bet is to go with the trend. Don’t waste your energy paddling upriver or fighting the price action. If you’re constantly working on figuring our short positions in a market that’s sporting a strong uptrend, you’re going to miss out on countless other opportunities that are there for the taking.
— Greg Guenthner