Markets returned to normal yesterday as interest rates collapsed and stocks moved based on earnings reports. IBM (NYSE: IBM), UnitedHealth Group (NYSE: UNH) and Goldman Sachs (NYSE: GS) disappointed traders and the losses in those three stocks pulled the Dow Jones Industrial Average down for the day. Broader market indexes were higher as 81% of the stocks traded on the New York Stock Exchange closed up.
We highlighted the importance of new 52-week highs earlier this year and noted that academic studies have shown stocks trading near new highs tend to follow through and provide additional gains. This indicates stock prices could continue to move higher over the next few months and even in the next few days since market averages are only slightly overbought. Even though it is trading at an all-time high, ConnorsRSI on IWM is only 74. A pullback should be viewed as a buying opportunity.
Now that the Washington is no longer the center of attention, watch for earnings report to be the primary force behind price moves.