OT: uptrend resumes

I was unable to post on 6/19 but that big day took us from “under pressure” to uptrend resumes

The Nasdaq composite enjoyed its best day of 2017 so far, and its strongest single-session advance since a 2.4% gap up on Nov. 7, as the stock market’s rebound picked up steam and the market’s outlook brightened.
The Nasdaq added 1.4%, beating the 1.35% increase on March 1 for the year’s best price increase. Strength in biotechs, internets, semiconductors and other technology stocks gave the composite a leg up over the other major indexes. Yet not to be overshadowed, the Dow Jones industrial average, up 0.7%, and the S&P 500, 0.8% higher, made new all-time highs.

Those new records and the Nasdaq’s surge show the market moving past a week of uncertain direction, and is the reason why IBD’s market outlook is back to a confirmed uptrend. That’s an upgrade from last week’s “uptrend under pressure” outlook, and it tells investors to relax cautionary strategies. At the same time, don’t go wild buying stocks. A certain measure of restraint is smart while stocks go through some sector rotation.

Some of the technology giants that got hit about a week ago are rebounding. Facebook (FB), Alphabet (GOOGL) and Amazon.com (AMZN) closed near new highs. But Netflix (NFLX) and Apple (AAPL) are still damaged, trading below the 50-day moving average.

The Nasdaq 100 is still 2% off its high. Up until the June 9 sell-off, high-tech stocks outperformed the market, but now the S&P 500 and Dow are the ones making new highs.

Small caps kept up Monday, with the Russell 2000 rising 0.8%. The Dow utilities fell 0.4% as the risk-off trade faded.

Wall Street is still not bothered much by geopolitical risks. The U.S. shot down a Syrian warplane over the weekend and Russia warned that it may shoot back next time. But U.S. investors just shrugged. Some markets move on political headlines; this is not one of them lately.

Volume fell Monday but that was practically a foregone conclusion after options and futures expired and caused Friday’s volume to swell. Monday’s Nasdaq volume was higher than Thursday’s, if that provides a better comparison.

The number of distribution days remains light. Breadth has been better on the NYSE, where the advance-decline line is at new highs. But the Nasdaq’s A/D line is horizontal. A similar difference happened in parts of December and January, but Nasdaq kept going higher. Much of that was due to the superior performance of the biggest Nasdaq stocks such as Apple and Amazon, which has now diminished.

The NYSE Composite is at a new high also. It is sort of a proxy for foreign stocks because 55 of the 100 largest stocks in the index are foreign, according to LPL Financial. It’s a reflection of the good performance in international markets this year.

Now that conditions are better for buying shares, investors should be looking for new buy areas in the top stocks. Several broke out Monday, among them U.S. Concrete (USCR), which topped a 71.95 buy point in big volume.

The cement and construction aggregates industry group is still lagging. It rallied in autumn on President Trump’s infrastructure goals, but it could be years before any projects get funded. IBD’s building products industry group — more closely aligned with the homebuilding industry — hasn’t improved much in ranking either. But Fortune Brands (FBHS), Masco (MAS) and Boise Cascade (BCC) are decent charts in that group.

“Steady, not frenetic, housing demand,” was how analysts at Nomura described the building sector in a report Monday. “Our June survey of construction service providers shows steady demand in June, although not at the frenetic pace seen in 1Q. The average growth reported across all construction service providers was 4% (year over year), with 44% of respondents reporting single-digit growth and 20% (down from 26%) reporting double-digit growth. … Construction service providers remain upbeat on the outlook.”

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