TRANSPORTS were indeed a very good clue yesterday and today we get another gap to the upside. The TRANSPORTS broke through the 50 day average like a hot knife in butter as JB Hunt reacts well to earnings. Other names in the area followed suit. Today, we gap up again as UNH, GS, JNJ in the DOW gap up a bit and high beta name NETFLIX moves up about 7%…which gets the juices flowing in beta.
Major indices will gap above the declining 50 day moving average. As we have told you, nothing good can happen when trading below this line. If the line can be held on the upside, the market gets the opportunity to build on the recent move off the vital longer-term support we outlined for you.
Keep in mind, this is all happening while there is an amazing amount of what could be perceived bad news. Remember, it’s not the news. It’s how things react to the news and right now, there continues to be a change in complexion. But also keep in mind, we are just back into the middle of the range that started with the highs on January 29th and the lows of February 9 and April 2.