A Global Field Day

It wasn't just the NASDAQ gap-n-run, or even the record US index highs. It was the record highs across the globe that made Monday's financial markets so noteworthy.

Monday was a day which spontaneously revealed the true scope of the current global expansion. Markets in Brazil, Mexico, Australia, China, South Korea, France, Germany and England -- along with the SPX, NYSE, RUT, MID and WLSH -- all notched all-time record highs. For the US markets, the best news was that the Financials caught a bid. The worst news was that volume was tepid yet again. Trading began in a blaze of glory, but volume faded as the day wore on. Institutional investors still aren't buying it -- literally -- while the shorts continue to grit their teeth and ride out the squeeze.

That said, market internals were phenomenal today. 70% of all public companies in the US closed higher on Monday, while 75 of every 100 shares that traded was a buy. Even more impressive, New Highs out-numbered New Lows an eye-popping 659-to-45! Volume or not, these are remarkable internals.

As if a metaphor for the lackluster volume, the IBD100 was strong -- but not stellar. The index outpaced the broader market, gaining 1.1%as 73 of 100 stocks moved up. Also, an above-average 26 stocks hit record highs. But volume among these 100 stocks left much to be desired.

Monday's gap-n-run leaves a bullish island in its wake for the Composite. The next few days define how important this formation becomes. The weak volume favors Monday's gap ultimately getting filled, but who knows? Few investors scripted the market getting this far, so a spirit of surprise abounds.






It was encouraging to see the Financials catch a bid on Monday. The truth about diamonds is that most are continuation patterns, thus stacking the odds against the BKX. Even though the Banks rebounded and moved upwards through both their 200- and 50-day, they aren't out-of-the-woods yet. The Brokers are less rate-sensitive and paint a much stronger picture.







Considering the synchronized strength of the global markets, it's worth noting that Dow Theory stars are equally aligned. The Dow 30, Transports and Utilities each sit within 2% of all-time highs, historically a very bullish pattern.









Even though we've been discussing it for several weeks, I wanted to park it here tonight that the BTK posted an all-time high today.







On Monday, while the NDX had a good day -- and Software hit a 5-year high -- the top ten gainers on the NDX couldn't have been more diverse: a school, two biotechs, a clothing company, a trucker, a telecom, an energy play, two internets and a video game maker. This is a very good sign, but also suggests that If you want to buy tech, you must choose your stocks carefully.






It's an interesting time to be in the market, and how far this madness goes is anyone's guess. While lots of investors get nervous around new highs, in truth they're very bullish and tend to beget more new highs. The global coordination of index records is very provocative, and it'll be fascinating to watch it all develop further.

The low volume is a big problem for me, and personally I've been been culling my own herd based on price/volume divergences. Strangely enough, those have been very few, and stocks in my universe continue to behave well from the inside out.

We get reams of new data and earnings numbers tomorrow, providing lots of opportunities for pin action. Up or down, it could be a lively day.

Until then, have a great evening.

best

dk