Above The 40 – A Fresh Market Surge Barely Moves An Important Needle

AT40 = 59.3% of stocks are trading above their respective 40-day moving averages (DMAs)
AT200 = 57.8% of stocks are trading above their respective 200DMAs
VIX = 9.8 (a 13.3% drop)
Short-term Trading Call: cautiously bullish

Commentary

Buyers ended last week on a strong note with the S&P 500 (SPY) surging to yet another all-time high. The move quickly invalidated the bearish engulfing pattern that started the week on a sour note.

The S&P 500 is back in top bullish form with a fresh all-time high.

While the S&P 500 gained a respectable 0.8%, the Nasdaq soared 2.2% and the PowerShares QQQ ETF (QQQ) surged 2.9%. Both tech-laden representatives hit fresh all-time closing highs. Tech earnings were in full effect to produce the bulk of the day’s celebration. The volatility index, the VIX, added to the bullish feeling by imploding all over again for a 13.3% loss.

The volatility index plunged back toward its record low.

Yet, for all the bullish ripples on the surface, AT40 (T2108), the percentage of stocks trading above their respective 40-day moving averages (DMAs) only gained three percentage points to close at 59.3%. This small move of the needle suggests that Friday’s advance was relatively narrow. I am not overly surprised since big cap techs were all the rage on the day. I will be looking for the rally to broaden this week with AT40 even challenging the overbought threshold (70%). The biggest wildcard looks like the Federal Reserve’s meeting on Wednesday, November 1st.

STOCK CHART REVIEWS

Amazon.com (AMZN)

AMZN was the clear star of the day as it not only drove up the tech indices but helped motivate buyers across big cap tech. The stock gapped up above its closing all-time high and never looked back. After the dust settled, the post-earnings move produced a whopping 13.2% gain. I failed to execute my “buy AMZN at the post-earnings open” trade. Clearly, it would have been a tremendous winner this time around!