Review of Market Action with Focus List for 2nd December
A positive sign as breadth begins to take a turn!
As highlighted in yesterday’s newsletter, my main concern for a sustained rally was whether we can string together a broad-based rally with improving breadth.
Despite the QQQ 0.00%↑ and SPY 0.00%↑ both finishing around flat for the day, I actually find this to be quite encouraging that following yesterday’s +4.56% and +3.15% rally (respectfully), the indices barely gave anything back at all.
Another positive was that both these indices finished well off their lows and had decent DCRs (daily closing range), signifying that there may yet be substantial demand even with yesterday’s rally.
To make things even better, after mentioning yesterday how imperative it is that breadth expansion continues into today’s session - as mentioned by John Boik, we actually finished with the best New-Highs / New-Lows (NH/NL) reading in over a year:
A change in trend of NH/NL in the $SP500 and $NASDAQ:
This is not to say that we now have a green light to buy everything and anything - far from it. The principles of progressive exposure and financing risk from one trade to another are as important as ever, some breakouts are still failing and it is essential to avoid getting complacent and letting our guard down.
Action from yesterday’s focus list was mixed - stocks such as $NUVL and $AEHR had strong breakouts while others such as $FDMT squatted their breakouts:
One negative I saw today in regards to the overall market action was actually the relative weakness in solar stocks - with solar etf: TAN 0.00%↑
Nothing is entirely broken here just yet, after all it is was “just” an inside day, but would have rather seen some relative strength in a potential leadership group on a day like today.
The solar theme definitely wasn’t helped by $SHLS closing -19.5% following an offering and CEO announcing his departure.
Now, focusing on moving forward:
Keep reading with a 7-day free trial
Subscribe to Stockbsessed to keep reading this post and get 7 days of free access to the full post archives.