Range Bound for Now But Bulls Should Test Higher Early This Week
Stocks still have done nothing wrong since the rally began in December. Since the peak last week, they have been quietly digesting massive gains by mildly pulling back. For all major indices, the stock market should be range bound for a bit, bound by last week’s high and perhaps a few percent lower. If and when last week’s highs are exceeded, the widely watched average price of the last 200 days should provide a short-term ceiling.
Coming in to the new week, I am expecting the bulls to mount at least a little upside, if not a full test of last week’s peak. Sector leadership should be a little more selective and we will see how high yield bonds perform. So far, they have been the very important quiet leader and I do not believe the economy will turn down without junk bonds lagging first.