Apple Leads the Charge as 'Smart' Money Remains Bullish
The market opened weak and closed strong, typically a bullish sign.
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The best markets open weak and close strong. We had a good example of that on Monday as the indices struggled at the opening bell but trended steadily higher most of the day and closed at the highs.
There is seldom mention of it in recent years, but there used to be a stat called Dumb Money/Smart Money, which compared the first hour of action against the last hour. The thinking was that "dumb" retail investors tended to act at the opening bell while "smart" institutional investors acted in the final hour. That probably is not a valid distinction, but a strong close is definitely bullish.
At the end of the day, about 55% of stocks were in the green, but what was most impressive were the many pockets of strong momentum. Apple AAPL led the charge into new high territory along with 267 stocks. My list of stocks moving up more than 10% was very lengthy, and speculative groups like biotechnology IBB and semiconductors SMH looked quite good.
Action like this attracts serial top callers like bears to a beehive, and they often are stung. The irony is that the more skepticism builds about the sustainability of this sort of frothy, trending action, the more short-squeeze and FOMO it creates.
One of the hardest things to do in trading is to stay with a strong trend as it becomes more and more extended. I'm hearing a lot of moaning and groaning about premature sales, but taking some partial profits is a good way to ensure that you maintain a high level of flexibility.
We're approaching a point where even bulls would welcome a pullback to find better entry points, but the trend remains your friend until it ends.
Have a good evening. I'll see you tomorrow.
At the time of publication, DePorre had no positions in any securities mentioned.
