From Cabot Top Ten Trader
The good news of this week’s action is that the intermediate-term trend, which was on the fence a week ago, is in much better shape—all five major indexes we track are solidly above their lower (50-day) moving averages, and it would probably take a 6% to 7% drop from here to threaten the uptrend. As for leading stocks, some took on water, but we’ve seen no real abnormal action—following big runs, some digestion is normal to see, and in fact, we think it could set up some attractive early-stage pullback opportunities. Of course, there are still issues out there, not the least of which is the divergent environment, which at the very least makes bouts of rotation and topsy-turvy action more likely. We’d also say that, while investor sentiment in general remains subdued and skeptical, there are growing pockets of greed as the leading stocks have done so well.
Updated May 22, 2020 