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Stock break to session highs

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Stocks have bested their earlier session highs as the Dow Industrials (INDU) now trades 20-points above its 50-day moving average and this has had a more bullish impact on other areas of the market in the past hour.

The NASDAQ-100 Trust (AMEX:QQQ) $32.43 +5.42% jumped to an intra day high of $32.55 in unison with the Dow's break to new session highs.

Helping fuel the gains in the QQQ sure seemed to be a new intra day high in the Biotech Index (BTK.X) 418.65 +5.71%. This is interesting as the biotechs really aren't that economically sensitive and hints that bears are stepping up their efforts in short-covering.

There still seems to be some thoughts in the market that the current rally can have a bear sitting back as if the buying is overdone, but I don't see that as necessarily being true. At least not as it relates to recently discussed NASDAQ-100 Bullish % ($BPNDX) and some retracement brackets that perhaps depict trading ranges.

Biotech Index Chart - Daily Interval

Earlier today we noted bullishness in the cyclicals as those stocks are more "economically sensitive." However, the biotechs have very little "economic significance," but will often trade more bullish as the MARKET gets more aggressive with its buying. In recent weeks, I've tried to alert bears not to be complacent with their trading. Comments like "overdone" by bears that are hoping for pullbacks as trades get away from them can be very damaging to their accounts when/if the pullbacks don't come.

Earlier today I set some upside alerts at today's relative highs in various indexes. Not long after the BTK.X broke to a new intra day high, I was then hit with upside alerts in the QQQ's and Dow Industrials. At last count, I had 17 "biotech" stocks in the NASDAQ-100, thus some impact to the QQQs.

Jeff Bailey
Senior Market Technician
Option Investor

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