Rally Continues
The rally that started mid-July looked like it was about to end only a month later. On Monday, August 17th, continued selling from the Friday before looked like the start of a correction. The S&P 500 was down 3.26% during the period on consecutive increases in volume. By the end of the week, however, the market reversed course again hitting new highs for the year on above average volume (which was subject to August options expiration). Since then the market has not been able to follow-through and trading looks weak. But the breakout last Friday was impressive and the bias for the time being is to the upside.
In terms of sector performance, Financials continued to lead but Technology underperformed and Consumer Discretionary came in just below the S&P 500 over the last 5 trading days. The S&P 500 is represented as the horizontal 0 baseline. Returns above the centerline have outperformed and those below have underperformed the S&P 500 during the period.
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In terms of major U.S. markets, small cap companies have led over the last 5 days and the NASDAQ has underperformed the S&P 500.
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Internationally, Germany and France are leading and significantly outperforming the S&P 500.
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Stocks are overbought and could correct at anytime, but the likelihood there is more upside is very good over the months and quarters that follow.