Thursday, January 03, 2013

Markets Roar and Soar!

Breadth Thrust
Markets roared and soared ahead on the news of fiscal cliff deal.  Each of the market indexes I track viz. DIA, SPY, IWM and QQQ all tacked huge gains of 2.44, 2.56%, 2.94% and 3.18% respectively.  The last two trading days in the indexes netted around 5% approx from the lows.  There is no arguing against this move since breadth also tracked high which we haven't seen in over a year.  Having said that, the markets now need to digest this big move over the last two days.  The logical and ideal course for this market is go sideways for a few days, digest the move and resume the uptrend.  Perhaps, in this phase the breakout of stocks have a more likelihood of following through given that there is a breadth thrust.  Let the price action dictate the next course of action.

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