The stock market is nearing all-time highs. In fact, it seems to keep reaching new ones on a regular basis.
Advancers are leading decliners.
Percentage of stocks above their 20/50/200 DMA is higher than stocks which are not.
The only thing that the bears can take some comfort in with these charts is that some of the volume and oscillators are indicating a possible downward trend.
Yes, there has not been a whole lot of love for the bears lately and they are feeling left out.
The contrarian would say, this means we are due for a correction.
The conformists or anti-contrarians say lets keep the party going.
The realists say, perhaps we should look for stocks or sectors holding up well enough but not yet joining the party. Perhaps stocks with some “safe” characteristics such as dividends would be nice to include too. Perhaps these are just waiting for the right invite.
The chartists say the overall market is doing well. SPY and DIA charts look strong . . .
Though, the QQQ is perhaps looking a bit extended.
So where do we look for stocks and or sectors holding up well just waiting to rally?
Mr. Bull, I’d like you to meet Mr. Financial Sector. He’d like to join the party. He’s just waiting for the right conditions. Like . . .
– Financial Reform
– Tax Reform
– Inflation and Rate increases
Those are the tickets that will get him out on the dance floor dancing the happy dance.
The technical charts for the financial sector look promising. They look like they are poised for a breakout.
Of course, bulls are hoping for an upward breakout, and the bears are hoping for a breakdown.
Unfortunately for the bears, there are the three catalysts, previously mentioned, just waiting to kick in. And they are pretty strong catalysts.
Unfortunately for the bulls, the current administration and congress is painfully dysfunctional. When and if all this is going to happen is anybody’s guess.
So until then, we wait and hopefully enjoy the ride.