Over the course of the last three trading days this past week, the S&P 500 Index and Nasdaq broke out of the trading range in place since mid December. We highlighted this range in a recent post that noted sizable corrections are unlikely when earnings are improving.
For most of the period since the beginning of the second quarter last year, new highs have exceeded new lows, indicating the broader strength of this advance.
Not participating in the breakout are small cap stocks; however, the 50 day moving average continues to hold support.
The fact this is the second longest rally since the end of 1932, it does seem a market pullback is due. Investor complacency seems to have set in with the VIX trading near single digits. But...
....with the VIX trading at a low level, one should evaluate the VIX in relation to the 10-year Treasury…