The major stock indexes rallied hard today after last Friday’s pummeling, with volume remaining low on all rally days, including today.
Officially, the Dow Industrials rose 1.1% on NYSE volume of 5.2 billion shares, while the NASDAQ advanced 1.4% on 2.1 billion. The leadership profile remains very positive, with 573 stocks making new highs versus 62 making new lows.
The short term momentum oscillators remain positive, confirming the bullish stance of the AlphaKing Trading Indicator. We have no new trades at this time.
The market remains on the cusp on a massive decision, with last Friday pointing to a bear win, while today sets up a potential killer blow victory for the bulls. Once again the trend/momentum dilemma is held hostage to the presence or absence of a follow through to today’s set up advance, as all major stock indexes closed smack beneath new highs for the rally off the March lows.
Oddly enough, the voters in Massachusetts may hold the key to who wins and who loses in this bull/bear war, as voters there decide whether to keep the democrats in total control of the senate, versus handing the republicans a victory that returns the filibuster - and thus gridlock - back to the senate. The stock market has loved gridlock in the past, and thus the stock market should rally hard if the democratic candidate loses, and fall hard on a dem win. We should know the answer tomorrow. Dow 12,000 remains the target if the indexes can smash through current resistance, while a rapid retest of the 200 day moving averages (purple lines in the charts below) should land if the bulls fail in their breakout quest.
401K investors should have ˝ of their portfolio invested in a stock index, or aggressive growth, mutual fund, with the other ˝ remaining in a money market fund.
The Index portfolio is ˝ invested in QQQQ with the other ˝ remaining in cash.
Kevin Wilde, Chief Trading Strategist AlphaKing.com.
