Markets Looking for Follow Through to Friday’s Rally
One impressive day in stocks is a possible starting point for positive outcomes over the next few weeks, but we need to see some follow through this week before we can read too much into the gains made late last week. Friday’s rally in stocks was impressive in terms of breadth and volume. Volume associated with advancing issues made up 92% of the total volume traded on the NYSE. The advance-decline ratio on the NYSE was 8.4 to 1.3, which is very good. S&P futures were up over 8 points on Sunday night. At 5:45 am ET on Monday, S&P futures were up a modest 2.3 points. During the trading day on Monday, we will be looking for some type of follow through relative to Friday’s gains. If we can get another positive day in terms of breadth and volume, the odds of a sustainable intermediate-term rally in risk assets will have increased.
In order to be prepared should markets be able to continue to rally this week, over the weekend we ranked flexible and no/low commission investment options. With markets focusing on both deflationary and inflationary forces, it is important that we remain flexible and nimble in the current environment. The table below shows our final notes relative to this weekend’s research; colors are based on short-term attractiveness; rankings on longer-term attractiveness.
If the markets remain weak, we may do nothing with the research conducted this weekend. However, we are prepared should Friday’s rally attempt be able to see some follow through gains sometime this week. The CCM BMSI came in at 235 on Friday, which is indicative of a weak market, but one where conditions are favorable for a rally. As we discussed on Friday morning, this remains a “prove it to me” market.
