Last week we saw the market blast off in the first week after Labor Day. While there has been a legion of stubborn shorts out there, I have been saying for months that this action has clearly been bullish and we were headed for new highs. There was nothing in the price action that said short, and I’m not sure why so many people wanted to be short, especially in what amounted to a dull market.
During market rallies, you look for several things to gauge the health of them. You like the rally to be broad-based. You like to see sector rotation. You like to see leading stocks making new highs. You like to see new leadership emerge. You like to see some laggard sectors start to play catch-up. We got ALL of that last week. Tech leaders like Apple (AAPL), Amazon (AMZN) and Google (GOOG) lead the charge, LinkedIn (LNKD) made new highs, financials made a big move, former momentum leaders like Chipotle (CMG) and Lululemon (LULU) bounced back with a vengeance.
Now that we have broken out of this pattern in the market, I think it is the beginning of a multi-week run. Don’t fight the price action!
By Marc Sperling
Disclosure: Marc Sperling is long PXD, EOG, FIO, GMCR, JPM, MCP, AAPL, FSLR, V, X, MCP calls, DRYS calls, ANTH, DRYS, S, EXPE, AIG calls, EXPE calls, LVS, TSPT, MSFT, SPY puts, MA, AIG, DNKN, SLV calls, ISRG, AAPL calls, RL, SLV, AKAM, CMG calls, LULU calls, PCLN, LNKD calls.