Overview

Stocks continued their recovery this week with the S&P gaining 3.3%, led by a surge in Energy and Materials. The S&P is now just 5.4% below its highs, having risen for 8 of the last 9 sessions, finishing the week above its 50-day MA for the first time since 8/18.

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It wasn't just an advance in oversold sectors however.

This chart from Charlie Bilello, CMT @MktOutperform perfectly demonstrates the change that's taken place, showing the percentage of stocks above their 50-day MA has moved to over 60%, the most since May.

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Another notable area of strength this week was in the Transports index, posting its highest close since 8/19, and overcoming a descending trendline of lower highs from March 2015.

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Overall, the market went a long way towards putting in some of the work I've thought would be necessary for my timeframe before actionable ideas could again present themselves.

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Alpha Capture Portfolio

Our portfolio was again relatively quiet, gaining 0.6% on the week vs 3.3% for the S&P.

It's now -1.7% YTD vs -2.1% for the S&P.

Not surprisingly, given the changing market landscape, we had two new entries trigger this week, but with only three positions and over 80% in cash, on a relative basis the lead we had over the index for most of the year is rapidly narrowing against a resurgent market. Barring a swift reversal, it's likely we'll have additional entries and trade ideas in the coming days, reflecting the recent strength and number of individual names hitting fresh highs.

CLICK ON THIS LINK FOR COMMENTARY ON CURRENT POSITIONS, NEW ENTRY/EXIT SIGNALS, ADDITIONAL TRADE IDEAS, AND A COMPREHENSIVE WATCHLIST.

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Sector Overview

The nascent recovery in Energy ($XLE) gathered pace this week, and although for anyone with a longer timeframe there's still a lot of work to be done, for shorter-term players there's already a higher low and higher high in place, and perhaps a 'fear of missing out' on the bargains to be had.

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Longer-term the leading sector remains Consumer Discretionary ($XLY), spending every day this week above its 20, 50, and 200-day MA's, and looking like it's ready to resume its longer-term uptrend.

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Consumer Staples ($XLP) also continued to recover, and is the only other sector SPDR above its 200-day.

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Incredibly, Healthcare ($XLV) now finds itself at the bottom of the heap, below its 20EMA and barely positive on the week.

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Watchlist

Consumer-related stocks still dominate our list, but we're starting to see representation from other areas now, a welcome development if this recent market upswing is to become sustainable longer-term.

Here's a sample of 8 names from the full list of 30:-

$PGR

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$NOC

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$CRM

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$MO

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$HAWK

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$TSS

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$UA

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$ULTA

CLICK ON THIS LINK FOR COMMENTARY ON CURRENT POSITIONS, NEW ENTRY/EXIT SIGNALS, ADDITIONAL TRADE IDEAS, AND A COMPREHENSIVE WATCHLIST.

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