Saturday, October 25, 2014

What a Difference a Week Makes

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The Market Trend Model (http://bitly.com/M_Trend_Model) now shows a positive bias after stocks rallied like a rocketship during the last 5-days.  As I commented last week, Wednesday October 15 appeared to mark a capitulation day as all of the sellers appeared to have "sold out."  To me, it appears interest rates are the key to the latest move in stocks as the 10-year treasury note yield (http://scharts.co/1vdl5Wp) looks to be directly tied to investor sentiment.

The market internals have definitely improved with the important summation index for both the Nasdaq and the NYSE now showing a positive bias on the daily and weekly time frames. And while the Russell 2000 was the first index to begin the new uptrend, the Nasdaq-100 and the Nasdaq Composite are the leading areas of the market with strong outperformance last week.

For the current rally to have staying power, look for the Nasdaq-100 to remain above its 10-week moving average and look for the other major indices to retake their respective 10-week moving averages.