Stock Market Continues To Ride Energy and Small Caps Higher

The S&P 500 Index rose 0.81% on Tuesday as Janet Yellen’s dovishness was greeted with cheers on Wall Street. As well, the NASDAQ Composite was the leader (+1.53%) with the Russell 2000 close behind (+1.32%).

Looking at the broader market and current indicators, all four major U.S. stock market indices have strongly bullish intermediate postures and are trading above rising 30 day moving averages. Only the Russell 2000 Index has a “3 Green Arrows” signal currently due to MACD histograms that have cooled down on the other indices.

Cryptocurrencies remain hot, with Ethereum up tremendously(+20%) over the holiday weekend, allowing us to close down our previous trade after just 2 days at max gain.

The US Dollar Index has declined to start the week, lending support to commodities. Crude Oil’s strength is a big reason for the out-performance of junk bonds in the fixed income complex

Long-term U.S. Government bonds are trying to bounce but remain in a strongly bearish posture; the 10-year Treasury yield settled lower on Tuesday.

Energy took over the top slot on the Sector Selector tool over this past weekend, and is showing strength early this week. Technology and Industrials have weakly bearish intermediate postures, but their moving averages still point higher.

Our trade application example featured selling a bull put spread on Costco (COST) as a slight reversion-to-the-mean trade based upon its own oversold cluster signal.

Get market insights, stock trading ideas, and educational instruction over at the Market Scholars website.

Stock Market Video – News, Analysis & Insights for January 20

Twitter:  @BrandonVanZee and @Market_Scholars 

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

Sign up for our FREE newsletter
and receive our best trading ideas and research