Much Improved Market Internals
This afternoon’s session saw improvement in breadth, volume, and participation from cyclical assets. As highlighted below, 93% of the volume on the NYSE was associated with advancing stocks, which shows conviction from big buyers. Gold (GLD) was down 1.68% on heavy volume.
Volume and gains picked up in numerous markets/ETFs that you would expect to perform better than the S&P 500 in this environment. Some examples: KOL, FCG, XME, EWZ, PIN, PFF, EWG, KIE, EEM, PSP, IWM, VNQ, IWN, KBE, EWQ, QQQ, VGK, XLK, EWU, XLI, IYT, XLF, IXC, and XLY.
Recent consolidation was resolved to the upside with a long/bullish candlestick. Short periods of consolidation have occurred frequently in recent weeks (see orange boxes below). Note the look of the candlesticks highlighted with the green arrows (similar to what we saw today).
Knowing the bank stress tests were coming out after the close today, we added to our long positions in an incremental/measured manner today. We may see some “give back” tomorrow, but the majority of the evidence was favorable today for risk assets.
