Buy Signal On Stock Market

In my last post I speculated how stock market may be fooling us into thinking it is strong, where in fact there is more distribution going on in the background. The action in last few days completely changed my view. Observe the following charts.


Apple, Chipotle, Amazon, Lululemon... There are a number of big cap leaders of the past bull market breaking out into new highs or out of from some sort of consolidation patterns. Let me remind you that a failed late follow through day is usually a very bad sign. I suppossed this will happen soon. However, a consolidation following it is a positive sign. Yesterday's very low volume down day and todays break above new intermediate highs suggest there is still some strength in this market. Add to this all these glamour leaders breaking out and I think market could try an assault into new highs by the mid fall.

However, let's go one step at a time. All mentioned names are now too extended to be bought. Any pullback in these names should thus be a buy opportunity unless something changes my view again. From now on stock market is on buy signal.