(By Rich Bieglmeier) On a light volume day without significant news, the indexes turned a shade of pink. As we mentioned in yesterday's i On the Market, Monday's have been slow for stocks as of late.
Monday's setback was minor, nothing more than a hiccup considering the advance the equity indexes achieved last week. iStock sees no reason why the NASDAQ, Dow, and S&P will not regain QE3 momentum and drive higher in the days to come.
When QE2 was initiated, stocks started off strong, then fell, but not enough to break the previous uptrend. After regaining its balance, Wall Street, promptly resumed climbing the mountain and rallied for the next three and a half months.
We could see a similar pattern emerge following the most recent bout of digital dollar printing. Some readers may recall that iStock previously wrote that the markets could be in the middle of an A-B-C move. That's when stocks rise to complete leg. Then, bulls pause and the indexes wobble, but they don't fall too much, a.k.a. part B. Finally, the pattern is completed with the C phase, which is similar in length and advance as the initial A rally.
For QE 2, stocks created leg A in anticipation of the Fed's decision, paused right after Ben green lighted more Wall Street cheese, and then ignited once again for a classic A-B-C pattern.
In 2012, A and B appear to be in place already; the only thing left is for C to do its work – fingers crossed.
Despite last week's power surge, most sectors flattened out in our weekly review. Those that were heading higher paused and those falling pulled up the shorts some. Amazingly, not one sector made our emerging bear list. We don't recall that ever happening before.
Overall, large-cap growth stocks regained the lead, while clothing looks appealingly strong, and gambling stocks emerge as possible short-term winner.
For our full review of hot and not so hot sectors, make sure you double-back to iStock a little later today.