The markets have shot higher over the last few days. From Friday's lows, the SPDR S&P 500 ETF Trust (SPY) has jumped a full $5. The markets have made new all-time highs and a short squeeze appears to be on. However, many name-brand stocks have not made new 52-week highs and are lagging the S&P 500. That may be a negative divergence and could warn of a coming pullback.
Goldman Sachs Group, Inc. (GS) is a great example of a stock that is not even close to seeing new highs as the S&P 500 makes new all-time highs. The stock has bounced hard off its recent lows but is running into major resistance at the $150 level. There should be a pullback at/around this level. The current price on Goldman is $149.31, +2.79 (1.90%).
Google Inc. (GOOG) is moving sharply higher. The stock is trading at $791.53, +13.88 (1.78%). While a great pop, the stock has two major moving averages coming up. The 50- and the 20-day MAs will converge at a price of $801 in the next few days. Should the price on Google move into that level, a pull back should be expected.
Volatility Index
Lastly, I wanted to cover the volatility index. the VOLATILITY S&P 500 (VIX) traded lower Wednesday, though not as much as one would expect considering the sharp move higher in equity prices. And that's often a leading indicator of a pull back. Based on that factor, come Friday, the markets should see a small dip back down.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
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