With the S&P 500 nearing a new all-time high, technical expert Larry McMillan assesses the road ahead. Here's his technical view, a look at market leadership, and some favored stocks.
"A new all-time closing high for the S&P 500 suggests that the all-time intra-day highs at 1552 are now the next key level within the context of this market cycle. The positive technical pattern of higher-highs and higher lows has continued.
"Sector leadership remains positive as the financial sector – as seen in the iShares Dow Jones U.S. Broker-Dealers Index Fund (ASE: IAI) and the iShares Dow Jones U.S. Financial Index Fund (ASE: IYF).
"Also positive has been the continued strength in the energy sector as seen in the iShares Dow Jones U.S. Energy Sector Fund (ASE: IYE) and the iShares Dow Jones U.S. Oil Services Trust (ASE: OIH).
"Therefore, sector leadership remains positive – and this should continue to inspire further gains in the major market indices as long as this trend remains in effect. Meanwhile, market breadth has recovered over the past few trading sessions.
"The Equity-Only put-call ratios are clearly now in extreme overbought territory: however, they have not (yet) turned; and as an acceleration in the prevailing trend often occurs before a change in put-call ratio trend occurs, we are not yet concerned by their current extreme overbought state.
"In summary, we continue to view the market environment as positive, given the above-mentioned arguments: and normally, with the major market indices at new all-time highs – something of a market pullback would not be out of place.
"However, with the exception of the put-call ratios, none of our other indicators have yet reached 'extreme' overbought levels – and therefore further gains would not come as a surprise to us. Any pullback will most likely be sharp, and short-lived in nature; and we would treat it as a buying opportunity.
"The signals that our computers can 'see' but the naked eye might not, include: new Buy signals in Corning (NYSE: GLW) and Morgan Stanley (NYSE: MS)."
For more stock picks from the leading financial newsletter advisors, visit Steven Halpern's free daily website, TheStockAdvisors.com.
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