Hitting New Highs – March 12, 2021

The S&P 500 smoothed out its path this week. After a brief dip down on Monday, the S&P pushed up all week and had a good close into the weekend. The leading areas of the market are energy, financials, consumer discretionary, marijuana, cryptocurrencies. It doesn’t end there as industrial companies like Boeing are breaking out to the upside. All the transports including railways, trucking, and airlines are all pushing higher. Having industrials and transports push to new highs is bullish. Tech continued to lag as investors focus on the reopening economy trades.

The NASDAQ market was harder to trade as it was in yo-yo mode. It was alternating between up and down all week. With the stimulus checks coming out this week, and the vaccination process going extremely well, I expect more upside across the market but less so in tech than in the other leadership areas.

I mentioned gold was weak last week but the miners started to behave. Gold was a little better this week but the miners were even better. I like buying near the lows when I’m buying commodities, so gold miners fit the bill this week. If they don’t hold up, I’m out. I do like the set up as it starting to shape up, so I explained that in this weeks newsletter.

Global markets are bullish as many of them broke out to new highs across Europe, Canada, Mexico and Russia. Seeing this broad strength encourages me to focus on being bullish. The Schnell Strength Indicators (SSI) are all popping higher which makes them supportive of the new highs.

Summary: The clues given last week by the SSI indicators were to be bullish. We reluctantly agreed with them and that seems to be the correct direction. That’s the strength of using data rather than intuition. Now I want to focus on continuing to follow strength into the market. I’ve put bearish thoughts aside because we have the new stimulus and we also have an infrastructure bill that should be going through the government offices this month. Commodities continue to perform well which also suggests demand. I’m focused on the upside.

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