Breath extremely positive; Market undergoing consolidation

After the Trump election money moved back into stocks and breath jumped as shown by the Summation Index. On Nov 21 the oscillator on the summation index went over 1000 showing that a lot of stocks were participation in the rally. The Summation Index chart can be seen by clicking on the “Summation Index” tab at the top of the page.

Rallies seldom go straight up. Once the breadth becomes extremely positive, as is the case now, there tends to be pullback or consolidation. We are at that stage,

If this rally has further upside then the pullback/consolidation will be orderly and it will be aggressively bought.

Stock Lists and charts updated

Stock Lists, Stocks Grades and charts have been updated as of 11/25/2016.

A new chart has been added to the Summation Index tab. It shows the Summation Index for 5 months, so the recent movement of the Summation Index and the oscillator can be seen more clearly. It is called the “Short term Adjusted Summation Index”. The chart can be hidden or expanded by clicking on its title.

Medium-term uptrend with short-term pullback

For the medium-term we have a strong market uptrend as indicated by the summation index oscillator moving above 1000. There is also a very high probability of a short-term pullback in the market. This is indicated by the number of stocks moving up 50% in one month more than 20. If a short-term pullback does happen, it is a good opportunity to add more money to stocks.

The market is very strong and can be described as a "lock out market."  This is a market where most investors missed the turn and now can't find buyable entries to get invested.  If you weren't buying during the first few days of the rally, you are in most cases to late to buy the leading stocks.  You now either have to wait for a pullback or a new base to form.  The model list of stocks, that I go through almost every day, is a great starting place for ideas.  The problem right now is that many are too extended in price.  Financials, Iron Ore and Copper are some of the newest groups emerging since the election.  Over the next couple of weeks some in those areas might provide some possible buys. Freeport-McMoran, (FCX) is example of a stock that actually started to move before the election, rallied almost 30%, consolidated and jumped up again today.  That is the type of setup we have to keep an eye out since so many are extended in price.

Stock Lists and charts updated

Stock Lists, Stocks Grades and charts have been updated as of 11/18/2016

Market theme after the election

If rates go up soon the dollar will get stronger compared to other currencies. This is begin borne out by gold and silver sectors showing trouble in their monthly chart pattern along with VWO (FTSE emerging markets). The REITS are showing signs of trouble, they should go down if rates go up. VHF (Financials) are showing strength. If rates go up banks should perform well. So one of the themes after the election has been that rates may go up according to the price behavior of rate dependent sectors. Look at the "Sector ETF Analysis Weekly" tab.

Another theme is that VOE (MidCap Value), VTV (LargeCap Value) and SDOG (value stocks in S&P500) are all showing good price pattern. As David Ryan mentioned in his post that value stocks have shown two strong days in a row. This is borne out by Growth vs Value chart as well. The blue line has started to point down showing value stocks outperformed growth stocks last week.

A quick note on today's market action:
Following the election, the market has been all over the map.  Dropping 750 points overnight as the election results were coming in and then rallying over 350 points from the low Wednesday morning! Today, the Dow continued to rally while the NASDQ was down.  Many sectors were effected by the speculation of what a Trump Administration would do.  The volatility will probably continue for a few more days.  I would concentrate on stock selection and especially in the model list of stocks with high ratings.  There should be a few of these that emerge as leaders.  Also keep an eye on the Growth vs Value Chart because the value stocks have had two strong days in a row.

current market state is filled with fear

The current market state is filled with fear. The VIX index is at 22.5, a high value. One way to take advantage of this is to buy long term put option on VXX. After the election as the fear subsides VXX should fall. Again there are no guarantees. For any trade including this one you should have an exit plan if the trade does not work in your favor.