The Dow Jones and S&P 500 pushed higher, while the Russell 2000 and S&P 400 stalled out at prior highs yesterday. The Nasdaq showed a bit of stalling action on higher volume, but the higher turnover can be attributed to a gap down in $MSFT that produced a huge spike in volume.
The AAII Investor Sentiment reading (as of April 10) reported a 16% drop in bulls vs. a 26% jump in bears. The heavy increase in the bear camp probably added more fuel to the fire on Wednesday, as most short sellers were wiped out of their positions.
The rally continues to impress, with its ability to fight off 5 distribution days and rotate leadership. Until leading stocks start breaking down en masse, we must operate under the assumption there is more upside.
Earlier in the week, we posted a chart of Market Vectors Vietnam ETF (NYSEARCA:VNM) in which we were looking for a breakout above a tight-ranged consolidation, after forming a higher low on the daily chart. $VNM broke support below $20.13 a few days ago, so we removed the setup from our watchlist. However, $VNM returns to the watchlist today as a buy setup if the price action can return back above the 20-day EMA and our original entry point.
Even if our $VNM buy entry does not trigger, we’d like to see the ETF close in the top 30% of the week’s range, which would produce a valid reversal candle on the weekly chart. If so, we will keep the setup on our watchlist for a potential entry next week.