As we await the breakout over S&P 1100 (if not today, then surely in premarket tomorrow or Friday, when all the important work is done) let's do some chart review.
A lot of stocks have taken a quite substantial turn for the better after Tuesday's low volume surge. I am seeing countless charts that look like the one below (for Caterpillar (NYSE:CAT)). What is so interesting is how little "resistance" has meant when the computers go hardcore on the "inverse dollar" trade. It is as if the pretty red line means nothing. [click to enlarge any chart]
I can find about 200 charts that look identical to the one above - and not just the commodities or "early cyclical" stocks - in every sector there are many. "Student body left" trading is alive and well. If the market "melts up" I'd expect all of them to run en masse.
I can find a smaller group of stocks similar to our TriQuint Semiconductor (TQNT) which have already rallied back to near mid-January highs. These types of names are either about to make a "double top" (hence, one would want to sell) or ready to make a new leg up, at which point they would be stocks to buy.
If they make new highs, they would be poised to act like the stocks below, which I consider the strongest charts. Many of these barely appear to have been hit by the correction... they are some of the best of the best, from quite disparate sectors. I have not listed most of them below, but we have some of the best charts in consumer non discretionary - especially basic food stocks like Sara Lee (SLE) or Tyson Foods (NYSE:TSN) of all things! There are quite a few others. What that action is "telling us" is beyond me, other than that Americans are hungry.
Star Stocks Outside of the Food Group
Rockwell Automation (NYSE:ROK) - defense
Brookfield Properties (NYSE:BPO) - REITS, office
Dolby Labs (NYSE:DLB) - home entertainment
AutoZone (NYSE:AZO) - car repair
Limited Brands (LTD) - retail
Southwest Air (NYSE:LUV) - airline
Family Dollar (NYSE:FDO) - retail
Perrigo (NYSE:PRGO) - pharma / generic
Ashland (NYSE:ASH) - chemicals
Chipotle Mexican Grill (NYSE:CMG) - restaurant
Lennar (NYSE:LEN) - homebuilder
Disclosure: Long TriQuint Semi in fund; no personal position