The Week Ahead: Buy Those Market Leaders Before Christmas

Though some analysts discounted last Monday’s higher open and the S&P 500 gain of 1.55% as typical bear market activity, it provided the first evidence that the worst of the selling was likely over. The S&P 500 added to the gains on Tuesday, which caused further improvement in the technical outlook. In my early Wednesday morning post, it was clear that one more day of strong price action with bullish Advance/Decline numbers would complete the bottom formations in both the S&P 500 and Nasdaq 100 A/D lines. The post was updated at 3:30 PM, when it was clear that the A/D numbers were going to close very strong. It was a stellar week, with the markets led by the beaten-down Nasdaq 100, which was up 6.46%. The Dow Industrials gained 5.16%.  The S&P 500 was up an impressive 4.85%, which, along with the Nasdaq 100, had their best weekly gains since December 2011.Wednesday's comments from Fed Chair Jerome Powell  clearly reassured the market, but there was also quite a bit of buying demand that had built up. At the start of the week, less than 30% of the S&P 500 stocks were above their 50-day Moving Averages (MA's).  The CNN Fear & Greed Index was in Extreme Fear territory just a week ago.  Stocks held up well on Friday, despite the looming uncertainty of President Trump's  trade meetings with Chinese President Xi Jinping over the weekend.