Consolidation Broken, Stocks Breakout to the Upside

Blue Chips lead the way to the upside, finishing the day above the two month resistance level. The DJ Industrial Average ($DJI) finished the day up 1.25 percent. For the first time since mid-December, it settled above upside resistance, over 17700.

Equally impressive was the action in the small ($IWM) and mid-caps ($MDY), both leading to the upside.

I stated a few weeks ago that small caps ($IWM) would be the canary in the coal mine if the bulls were running out of steam and the bears are taking control. Well this action today was enough to shake off the uncertainty and fear. The bulls are on the move and if the Jobs data comes out without any wrinkles, the upside will be tested with conviction.

This will also signal support in the Energy sector ($XLE), especially if the sector can surpass its December highs.

Also, keep an eye on the Transports ($IYT), specifically Kansas City Southern ($KSU), and Echo Global Logistics Inc ($ECHO). I would look to build some positions on any pullback.

Have a great trading day!