Weak Stock Finish Dampens Early Hopes
In bull markets, strong closes tend to follow weak opens, but we didn't quite get that on Wednesday.
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One of the best ways to measure the health of the market is the level of strength at the close. To put it in simple terms: good markets close strong.
On Wednesday, stocks started slowly but gained momentum with breadth hitting the 70% positive levels. It lasted until about 12:45 p.m. ET, and then there was a steady rollover before a late bounce helped avoid a day-low close.
Dissecting the Closing Action
At the closing bell, all the indices were in positive territory, and breadth was 55% positive, but the finish wasn’t even close to the highs of the day. So far in 2026, there hasn’t been any close for the Nasdaq 100 (QQQ) or S&P 500 (SPY) at the highs. There were a few tries, but the last time the S&P 500 finished at the high tick was on December 11, 2025.
We don’t hear much about it these days, but many traders used to follow something called the Smart Money Indicator. This indicator compares early strength or weakness to late strength or weakness. The theory is that overanxious and emotional retail investors tend to act first thing in the morning, while professional, sophisticated investors act at the end of the day.
Momentum Remains Elusive
I’m not sure to what extent that is true, but there is no question that when the market is in an uptrend, it is much more likely to have weak opens and strong closes. The market gains strength throughout the day, and money pours in at the close as the fear of missing out builds.
That is not happening in the current market environment. On my scans of individual stocks, there are only a couple of dozen names that closed near the highs, and obviously, the indices did not do so either.
That needs to change if this market is going to gain some momentum. There was some better action during the day. The Magnificent Seven (MAGS) had a little follow-through bounce, and some of the gloom lifted. Small caps looked good early but faded fast late in the day.
The Game Plan
I want to be more positive, but this is not great price action, and upside movement cannot be trusted to gain traction. I see little alternative but to stay vigilant, sit patiently, and wait for some better chart patterns and momentum. A couple of strong closes would be a good start.
Have a good evening. I’ll see you tomorrow.
At the time of publication, DePorre had no positions in any securities mentioned.
