Momentum Monday – Dip Buyers Are Still In Charge

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The rally was tested last week and it passed with flying colors. Earlier in the week, we saw multiple failed breakouts in momentum names, but dip buyers managed to prevail. SPY pulled back to proverbially important $260 level and bounced. QQQ managed to hold above 160. In other words, what was considered a major resistance became support last week. This is bullish market development.

We are entering an interesting territory, where those who did not participate in the rally might become complacent and jump back in the market. The joy of missing out might turn into a fear of missing out. Tops are not made out of euphoria. They are not made out of slowing momentum either. They are made out of accelerating selling. There is no evidence of that yet. The 40 and the 50-week moving averages are the next levels of technical resistance.

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