The Gilmo Report

February 8, 2017

February 8, 2017

While the major indexes pushed to all-time highs over the prior two days, odd divergences were beginning to crop up yesterday. The first was breadth, which, despite all three of the major market indexes finishing positive on the day, came in at roughly 1.5 to 1 negative on both the NYSE and NADAQ Exchanges.

The second divergence was the fact that both of the broader NYSE Composite and Russell 2000 Indexes, were down on the day. This sort of action will tend to bring the bears out of hibernation, but I’ve seen this type of divergence occur several times in this market on the way up. Usually, it leads to at least a market pullback, but since the election all pullbacks have been buyable pullbacks, at least in the right stocks!

So we can see that last week’s pullback in the NASDAQ Composite Index was yet another one of these buying opportunities as it inexorably trudges to yet another all-time closing high on higher trading volume.

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