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Rally On?

After five straight days below the 50 day moving average, stocks soared above to the highest close in two weeks. Some commentators think this move is quite meaningful. And some think it's just more noise inside the same old range we've played in for the past couple months.

Those who find merit in this move point to the Russell also breaking back above its 200 day moving average as a sign of greater risk appetite. The improved New Home Sales report also added to the positive mood.

However, I am in the camp that there is little meaning in these market swings until we break out of the range (2000 to 2100). A breakout of that nature will show a more decided conviction on the part of investors to stay bullish or bearish with momentum to follow.

There is not much on the calendar this week to serve as an obvious catalyst for that move. However, next week has some key economic reports that may do the trick in ISM Manufacturing, ISM Services, ADP and Government Employment reports.

I could make good arguments for a breakout in either direction. Thus, perhaps best not to fully bet on the outcome now. Just wait for the overall market to make its move then get on the bandwagon.

Best,

Steve Reitmeister

Executive Vice President, Zacks Investment Research

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