[jon]

Stocks have definitely been in rally mode. They are now overcoming obstacles that would have scared them off just a few weeks back and definitely back in late spring. The China trade issues toward the end of June almost derailed the rally and Citigroup earnings threatened to strip away the rally this month leading into earnings. Those were overcome after some selling. The Intel and Yahoo news evoked selling for about an hour, and it wasn’t any desperate, panicked selling at that. No, stocks have their heads down and are just rallying, playing catch up with the economy at this point and factoring in some more better than expected earnings.



It is healthy when the market ignores bad news but it is also something to note because it cannot go on forever. Right now this action is in large part being driven by money that did not believe in the move but is now in chase mode trying to catch the breakaway move (borrowing from the Tour de France). We are hearing a lot of that from floor traders and market makers; orders are coming in from some holdouts, and they are pretty big orders as they dump some money into the market that was being held back in fear of a meltdown. Instead the continued melt up has some panic buying taking place. It won’t take much for that money to get scared and come back out of the market.



Now we have the majority of indices hitting new highs for the year if not all-time highs (SP400, SP600 once again). NASDAQ has ridden the wave as well and is now at its early January high at 2191.60. It blew through 2100 and barely paused on this move. This is another important level NASDAQ has to face down, and with the current strength there is little question it can do it. The issue is whether the move will have staying power, and that is a question as to just how far this run can last on the current spate of good news. Earnings were met with some trepidation, but with some good results from key stocks the money is pouring in and it overwhelmed the Intel and Yahoo results that were not up to expectations. The market typically reaches a saturation point in the earnings season when it posts this kind of run. As always it pays to watch for potential potholes ahead, and a good news run such as this warrants a bit of scrutiny at another important resistance point for NASDAQ. For now the signals are good with higher volume, good leadership, and strong breadth.