The S&P 500’s Breakout Bid Has Begun

Unlike Wednesday’s pop-n-drop, Thursday’s rally went the distance. The S&P 500 closed higher by 17.67 points, or 0.76%, clearing the 20-day moving average in the process. In fact, today was the first day the S&P 500 was able to close above the 20-day this month. It just about cleared the oft-watched 50-day average as well, but was sucker punched just before the bell.

Follow-through will be key here. A strong close above the 50-day as well as the descending trendline that has defined the market’s downturn will be the victory clincher for this breakout bid.

The S&P 500's Breakout Bid Has Begun

Source: OptionsAnalytix

Spectators disappointed by the S&P 500’s inability to completely breach resistance will be happy to note the small-cap-laden Russell 2000 sailed through its 50-day like a machete through jello. By day’s end, the Russell had climbed 17 points or 1.24%.

With resistance now fading in the distance, small-caps could make a run for their 52-week high of $1,415. All that stands in their way is the $1,392 level, which halted a pair of rallies in March.

Source: OptionsAnalytix

To round out our price analysis let’s check in on the belle of the ball — the Nasdaq Composite.

Large-cap tech has been leading for a while now. Due to the sector’s dominance, the Nasdaq remains the healthiest-looking index of the bunch. Its recent retracement was shallow and short-lived, just like the bulls like it. And with today’s thrust, it was able to close at a new record closing high of $5,916.78.

Bottom line: it appears buyers have finally wrested control of this market.

Volume analysis further strengthens a bullish view. The big three major indexes all registered accumulation days. When high volume accompanies a strong up day, it suggests institutions are wading into the water which could continue to propel stocks higher in the days to come.

On the sector front, retail and financials were standouts Thursday. Both closed higher by 1.86% and 1.69%, respectively. The SPDR S&P Retail (ETF) (NYSEARCA:XRT) looks interesting in particular. The struggling fund has finally turned a corner, busting through key resistance on heavy volume. Traders waiting for signs of a bottom before diving in need wait no longer.

As of this writing, Tyler Craig did not hold a position in any of the aforementioned securities.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.

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