Stock Market Euphoria is Rising

Wednesday recap:   Both the Russell 2000 +0.8% at 1275.35 and the NYSE composite index +0.6% at 11,171 made fresh all-time closing highs Wednesday, while higher cap major market averages rallied through stubborn near term resistance.

The 4 Stocks That Dominated the DJIA on Wednesday

April 15, 2015: Markets opened higher again on Wednesday and followed the energy sector higher as crude oil gained nearly 6% on a lower than expected build to U.S. inventories. The afternoon release…

Stock market euphoria is not making everyone happy. Day traders are frustrated with gap and sideways action. Swing traders need to be patient. Investors are in a happy place.

stock market euphoriaDJIA +0.4% at 18,112, S&P500 +0.5% at 2106  and NASDAQ +0.7% at 5011 have been toying with “round number resistance” for a couple weeks, and are now all within 1% of eclipsing their prior closing highs. A well-thought trading plan will position you to trade this price action with caution.

The NYSE Composite Index was clearly the star of the day!!   The NYA has been forming a near perfect ascending triangle since at least the October 2014 lows, with no less than 6 to 8 attempts to break through the 11,150 level.

This could prove to be a very powerful breakout if it holds.  The NYA is a great multidimensional index of small cap, to big cap, bluest of the blue chips that even includes Foreign Companies with global reach in the form of ADRs listed on the NYSE.  Keep in mind there are no foreign domiciled companies in the S&P 500.

The chart below is a weekly going back to early 2013 and highlights how consistently the NYA has rallied off its 50 week MA and the pressure that’s been building this year against the resistance of prior highs.  Watch this closely the next few weeks to see how convincingly we hold the breakout to new highs.


Oil, again helped fuel the market’s rally as the commodity broke through near term resistance and doubled its midday gains in the last hour of trading.  Oil has rallied 12% in the last 5 days, with the Oil Service Stocks seeing the most investor attention.

Stock Market Euphoria and the Crude Oil Trade

The catalyst for Oil extending its rally late in the day Wednesday came from comments by Iranian Oil Minister Bijan Zanganeh saying OPEC should offer support to members by cutting oil production by five percent.  While this is unlikely to happen, it does reinforce how “fixated” the market is on the direction of the price of Oil.

I discuss the crude oil trade in more detail here at Benzinga.

Ignore the Economist behind the Curtain!!

The market has consistently rallied in response to rising oil prices the last 2 to 3 months.  Oil is starting the day 1% lower, a well-deserved breather after the 12% rally since the middle of last week. Rising oil prices are most likely to be in play.

It’s not surprising that stocks are set to open a bit weaker, despite yesterday’s breakouts.   Momentum has not been a trademark theme of the market in 2015, as investors have sold resistance and bought support very consistently this year.

Regardless, it feels like the path of least resistance in the near term is higher.

Tim Anderson Managing Director TJM Investments, LLC

Twitter:  @TJAnderson1



NOTICE REGARDING PRIVACY AND CONFIDENTIALITY This e-mail and any attachments thereto is intended only for use by the addressee(s) named herein and may contain legally privileged and/or confidential information. If you are not the intended recipient of this e-mail, you are hereby notified that any dissemination, distribution or copying of this e-mail, and any attachments thereto, is strictly prohibited. If you have received this e-mail in error, please immediately notify me and permanently delete the original and any copy of any e-mail and any printout thereof. E-mail transmission cannot be guaranteed to be secure or error-free. The sender therefore does not accept liability for any errors or omissions in the contents of this message which arise as a result of e-mail transmission. In accordance with SEC Rule 17a-4 and NASD Rule 3010; Emails sent to and from this address may be recorded and are subject to archival, monitoring, review and retrieval by the TJM Compliance Department. TJM and/or its affiliates are a member of FINRA, CBOE, NFA, SEC, and SIPC. TJM’s main office is located at 318 W. Adams 9th Floor, Chicago, IL 60606. For more information about TJM, please contact (312)-432-5100 or fax (312)-432-4499.

About the Author

Leave a Reply 0 comments

Leave a Reply: