Stocks took a breather today but the Nasdaq still managed to hit its 41st new high of the year. But is a bigger pause on the way?
Stocks barely moved today but that didn’t stop the Nasdaq Composite from closing at a new record high.
The S&P 500 finished little changed at 2473.45, while the Dow Jones Industrial Average declined 28.97 points, or 0.1%, to 21,611.78. The Nasdaq Composite ticked up 0.1% to 6390, a new record high.
Bespoke Investment Group wouldn’t be surprised if the market took a pause here:
It’s worth noting that the S&P 500’s 10-day advance/decline line has gotten very extended to the upside here, so in the very near term we would expect to see a let up on the gas pedal from investors. The Tech sector’s 10-day advance/decline line has moved into the stratosphere to its highest levels in at least a year, so hold off on any Tech sector purchases until we see some mean reversion of this indicator.
JPMorgan’s Jason Hunter and Alix Tepper encourage investors to be “more aggressive about trailing stops to protect profits.” They explain why:
The S&P 500 Index continues to trend higher after holding favored support near 2,400. That leaves the bull market intact and keeps us in full long positions that have been held for most of the time since the Feb 2016 bullish reversal. Despite the continued trend, however, the patterns that suggest rally deceleration as it hits our base-case target zone for the year and approaches key channel/trend line resistance keep us on the lookout for further signs that the rally is set for a tradable setback. As such, we suggest getting more aggressive about trailing stops to protect profits. Additionally, a failure from resistance near 2,500 and retest of support near 2,400 in the weeks ahead would add further evidence that a broader distribution pattern is unfolding.
Too soon to get ready to run?