Hey, Ross here:
And let’s start the trading week with more good news – the sign that a very real breakout in the S&P 500 is finally here.
Chart of the Day
At the end of last week, the S&P 500 made a new high for the year.
If you’ve been paying attention to this newsletter, you should also see a textbook breakout pattern taking place in the index.
This is what we look for in individual stocks. When we get it paired with a broader market buy signal like this, I tend to get aggressive and take bigger trades.
Yesterday’s breakout higher pushed the index to 20% above the October lows, making this officially a bull market.
The Nasdaq has done even better – currently up 32% over the same period.
Of course, the indexes are market-cap weighted, meaning big stocks like Apple, Amazon and Google have far more influence on the numbers than small and medium-sized companies.
To confirm that the move is real, we want to be sure that the majority of stocks are participating in this rally.
Stocks in uptrends should, for the most part, remain above the 50-day. That’s my “line in the sand” that separates stocks going up from those going down.
So I like to watch the percentage of stocks above their 50-day moving average.
As you can see, we have progressed from having only 20% of stocks above to almost 50% over the last 8 weeks.
This is a good sign and confirms that mega-cap names are not masking weakness below the surface.
P.S. Would you like special trade prospects and potential market moves sent directly to your phone? Text the word ross to 74121.
Insight of the Day
NOW is the time to get aggressive.
When do the biggest gains in a breakout happen? That’s right – in the beginning.
Meaning as you just saw above, NOW is the time to get aggressive.
Remember – trading profits are NOT distributed evenly. The biggest gains happen only in select time periods.
Now could be one such time.
You can be sure the “smart money” is well aware of the emerging breakout pattern.
And with targets to hit and clients breathing down their necks, you can also be sure that they’re making big moves…
Embrace the surge,
Editor, Stock Surge Daily