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New bull market highs were formed by several indices this week. For the week, NDX was up 4.2%; it was the clear leader. SPY gained 1.8% and RUT gained 1.2%. NDX and SPY made new highs; RUT and DJIA did not.
Overseas, EEM continued to lead, gaining 2.7%. Europe gained 1.2%.
After rallying 5 weeks in a row, crude took a break, losing 0.9%.
The broader Nasdaq Composite Index (COMPQ) closed at a record high for the first time in 15 years.
Making new highs shows a bullish trend. The recent challenge for the market has been sustaining momentum from one week to the next. NDX, for example, has still not been up two weeks in a row since mid-February.
Over the last several weeks, SPY has lost 2%, gained 2%, lost 1% and now gained nearly 2%.
To be succinct, the question going forward remains the same as it has been in recent weeks: will the market show bullish strength by becoming and staying overbought and thus trending higher, or will it continue the pattern of giving back most (or all) of those gains in subsequent weeks?
Starting with NDX, the picture looks very bullish. NDX traded in a 3 month range from November to January (yellow shading). It had been in a higher range the past 3 months, until Friday's breakout higher. It is overbought for the first time since February (top panel). The February breakout continued higher nearly 4%; optimistically, that could be the set up now as well.