To say that the recent market action has been frustrating to traders would be an understatement. Since the beginning of December, the major indices have moved up and down within a clearly defined trading range and changed direction no fewer than eight times. The mood has flip-flopped back and forth in response to the various inputs including oil, Greece, and QE, and there has been no discernible trend. Well, up until the middle of last week, that is.
With the investing world seemingly focused on Greece and most analysts assuming that the script for the past dramas would play out once again (meaning that markets would remain volatile and move on every headline out of Greece and Eurozone leadership), one couldn’t be blamed for expecting that the sideways range would be extended until a deal was completed. However, a funny thing happened on the way to the Forum as traders began to assume that a deal would eventually get done and prices on some of the major indices broke out to new highs.
For example, take a look at the daily charts of the S&P Midcap 400 and the NASDAQ Composite below.
S&P Midcap 400 – Daily
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In reviewing the chart of the Midcaps, it looks as if a clear breakout to the upside is underway. And the same thing can be said for the chart of the NASDAQ.
David Moenning is Mr. Moenning is President of Heritage Capital Research, a privately owned, investment research firm. Heritage focuses on active risk management and an “own the best and ignore the rest” equity selection strategy.
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Positions in stocks mentioned: none
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.