The financials were the first group to report earnings, then it followed by the semiconductor stocks. The market responded positively to both groups, except for some losers due to their company specific issues in each group. The financials and semiconductors were the laggers since early 2018, now they have turned into market leaders.
Last week we sent out a blog about the furious bear market rally and the pending market top that occurred on Friday 01/18/2019. After the long weekend, the market did give us the correction that was expected. However, the correction has been very mild. It seems that the big guys are buying up the DOW.
We just witnessed a furious bear market rally in 16 trading days. The DOW rallied 14% in 16 trading days but it failed to produce a weekly reversal signal in the maximum allowed time length of 3 weeks against the December low. The weekly reversal signal is needed to enable the market to continue to move up from here.
The market staged an impressive 10.71% rally in the last 10 trading days. It took 65 trading days to decline 20.21% from the September top to the December low. The S&P 500 December price low was right at the 200-week moving average, meaning the price was at the maximum pain level for the long term bulls.
The S&P 500 violated the February 2018 intradeday low on Friday 01/04/2019. It has the entered the resistance zone at 2532-2600. From the way how it bounced from the Christmas Eve low we believe it has potential to go a slightly higher than the lower end of the resistance zone of 2532.
