Stocks remain higher, but as so often is the case on a gap open driven by a big news story, they are off the highs. Most of the indices show doji, having gapped and hung around. RUTX has lagged, at one point trading negative.
As noted earlier, these gaps upside after already good moves are problematic. Money has piled into tech and big name growth while some of the recent leaders from the more basic large caps, e.g. PG, VZ, PEP have suffered selloffs of the strong Friday moves. Drugs are off though just modestly.
Perhaps this is a rotation back to growth given the China deal to make a deal, but we are not really that interested in making big decisions given the kind of day it is and what is driving it.
We saw the gaps and while there was a midmorning test, given the indices were up for a week straight, we want to see if the gaps over resistance result in a test of that resistance -- often that is the case and you get better entries.
We are interested in AUDC in telecom as it finally makes a solid break higher.
SP500 26.08, 0.94%
NASDAQ 99.18, 1.35%
DJ30 255.77, 1.00%
NASDAQ 100 1.45%
Jon Johnson, Chief Market Strategist
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