NASDAQ Finally Achieves Near-Term Target - Lay Of The Land

Published on April 26, 2017 @ 4:00am

Another tremendous day yesterday put us right smack up against our short-term target just above the 6,000 level on the NASDAQ Composite, and sure enough the index stalled to close out trading on the day.

What makes yesterday's achieved NASDAQ level even more interesting now is we've got Trump set to reveal his corporate tax plan today.

This comes as Wall Street continues to look for any and every reason to take these markets higher. Will they get it today with Trump's new plan of tax attack? We're not so sure. All too often, overly hyped media events like today's press conference ends up being all for not. We see it time and time again, which is what makes yesterday's technical level even more concerning for the time being.

We're not suggesting these markets are rolling over, nor do we want them to at this point with as many bullish ideas we've got out there right now. However, it would be blind trust to think these markets are simply going to continue higher and higher without any sort of breather along the way.

Could they? Absolutely, but now that we're three days into a gapping market, one should expect at least a minor breather, and potentially even a bigger one than most might be expecting. However, it's all predicated on how these markets behave over the next several days.

Although we're going to continue to wait and see what happens around current levels, there's nothing wrong at this point with taking profits wherever you're happy doing so. Hindsight is always 20/20, and it's proven time and time again one in the hand is better than two in the bush.

The NASDAQ is clearly in new high territory, but the S&P 500 and the DOW have still yet to make that happen. Hard to believe, right? Yet, both major indices still continue to dramatically lag that of the NASDAQ, and even the Russell 2000 Small Cap Index, as evidenced by the weekly chart of the Russell below.

With the Russell 2000 now having made a new all-time high, it does support the idea of more bullish upside ahead, especially since small caps often tend to lead big rallies - its shows speculation and risk tolerance is alive and well.

The flip side of all of this is two-fold. First, how many times as we've seen these markets break down on new highs? Several in recent years. Secondly, as evidenced by the daily chart of the S&P 500 below, it is entirely possible these markets could go range bound as well. Meaning, another test or slight new all-time high on the S&P 500, only to have the markets work their way back down to roughly the 2,320 level when it's all said and done.

We're not going to call it either way just yet, but know depending on what's start to take place as soon as today, and more importantly over the next few days, we should get a pretty good indication of what could be in store for most of May.

For now, let's remain cautiously optimistic and tighten up your stops on stocks you've done very well with on any short of a short or mid-term basis of late. Actually, that goes for any ideas that haven't performed all that well either.