Everyone shouts, "Hurray!" The bull market is back again. The S&P 500 is now 20% off the lows, so we're again officially in bull market territory.
Clearly, I'm being sarcastic. Whatever person, institution or corporation decided 20% marks either a bull or bear market did it to either get attention or to sell something. There's no scientific logic to 20% beyond that it makes a nice round number and is relatively sizable when discussing moves on major indexes.
Granted, 20% was a good week or a profit-taking pullback during the dot-com bubble.
In short, the declaration of bull or bear because of a 20% move off the lows or from the highs is nothing more than noise or clickbait. What matters right now is the overall price action. The SPDR S&P 500 ETF (SPY) is forming a bull flag at new highs. A push over $430 should get a quick pop to $435.
Thursday saw a push off the 5-day exponential moving average (EMA), and we're playing out the last day of a slow news week. We could see folks take off risk into the weekend, but with the current action there doesn't seem like much reason to do so. If the S&P 500 were to drop below the 10-day EMA, I would expect traders with trailing stops to sell some of their holdings, but the bears have little ground to hold their fight.
Small-cap buyers did take a bit of a break on Thursday, but after a 7.5% move in five days on the iShares Russell 2000 ETF (IWM) , it shouldn't come as a surprise. It's healthy. And IWM didn't come close to triggering a trailing stop on an EMA basis or closing below the previous day's low.
It seems the Invesco QQQ Trust (QQQ) benefited from the small exits in the IWM, as we did bounce right off the 10-day EMA highlighted on Thursday.
We have the Fed's next decision rate looming, but until we get within 24 hours, the trend favors the bulls, and I continue to look for entries and scale out on moves higher. Nothing bearish in the water yet for me.
