Last week the crowd thought this market was all about the inability of the Trump Administration to push through its legislative agenda. What the crowd perhaps wasn’t expecting was that it might be all about the French elections held on Sunday. As it turned out, a French round one election outcome that was considered benign sparked a massive futures gap-up move on Monday.
This sent the major market indexes off on big gaps through their descending tops trendlines, as in the case of the S&P 5000 Index, or to new highs, as in the case of the NASDAQ Composite Index. The action so far this week seems somewhat ironic in view of my observation over the weekend that the market was perhaps setting up for a classic Ugly Duckling move to the upside.
With breadth looking weak, and the percentage of stocks trading above their 50-day moving averages declining, a “traditional” interpretation might have caused one to draw bearish conclusions. But this is not a traditional market, and what the crowd knows is often wrong, even when it might seem obvious.
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