The strong rally late Friday encouraged the stock market bulls as many of the daily technical studies turned higher. The major averages were able to close above their quarterly pivot levels so avoided weekly sell signals from the pivot analysis. Still, the daily technical studies need further strength before they could turn positive.
The strength on Friday was also enough to move the Two Sectors on the Edge back above their quarterly pivots by the week’s close. The Select Sector Financial (XLF) did close the week below its quarterly pivot. It was the only of the key sector ETFs to generate a new signal last week.
The 7.7% drop in the Shanghai Composite was in reaction to a crackdown on margin lending which has surged along with its stock market over the past year. It was the largest drop in six years but in Monday trading, the EuroZone markets were apparently not worried as they closed higher. They have continued higher in early trading Tuesday.
Last week, the utilities again led the market higher gaining 2.62%, but healthcare was one of the few market sectors to also close the week higher. In my weekend scan, there were three healthcare stocks that have very bullish monthly/weekly volume analysis confirming them as market leaders.