Signs abound that the U.S. stock market is headed higher …

Was any of this “long and strong” stuff predictable?

The stock market had a certain amount of negative events hurled at it, from Syria and the back-and-forth brinkmanship between North Korea and the Trump administration, to the innumerable mishaps from the White House.

Despite all this, plus equities being more than deserving of a pullback, U.S. shares have sloughed it off like water off a duck’s back.

If the above wasn’t exactly revealing of a market headed higher, Nasdaq leadership was.

Chart created using TradeStation

For a larger version of the chart, click here.

Along these lines, it is unusual for a market led by the Nasdaq Composite to run into serious trouble. This represents the growth segment of the market. Outperformance by this area indicates a risk-on mindset among investors. (An exception would be the March 2000 bull-market top. However, that cycle was froth at an extreme. Many companies went public with no earnings and some with no revenue. This was a speculator’s dream come true, but should have been played with a wary eye.)

If the above wasn’t exactly revealing of a market headed higher, then the superior breadth as evidenced by the New York Stock Exchange advance-decline (A-D) line was.

This is a favored long-term signpost of general market direction discussed here many times over the years. Highs in the SP 500 are not confirmed by highs in the A-D line. After at least several months of this, the market has historically been vulnerable.

If the above wasn’t exactly revealing of a market headed higher, then weakening in defensive stocks was. These segments, like the telecoms

IYZ, +1.53%

and consumer staples

XLP, +0.27%

tend to soften when investors have a higher level of conviction about being in the market.

If all the above hasn’t been enough to put a speculator on the right side of the market, or develop a bullish bias at minimum, an analysis of the liquid glamours was. These are growth titles expected to generate 18%-plus earnings growth that are supremely attractive to large investors, what with their deep liquidity.

A super-liquid issue allows a mammoth-sized position to be built over a period of weeks or months without it adversely impacting the market for the stock.

Most all of these titles exhibit good relative strength and lead the market.

Brief notes on some of the liquid glamours follow.

Among the names, Facebook

FB, -0.40%

was discussed favorably in the Jan. 27 column. While the social-media kingpin offered an attractive entrance then, at present it does not, as price is about 7% above its most area of support in the $140-ish area. A pullback to this area can be watched for.

Chart created using MarketSmith

For a larger version of the chart, click here.

As always, a protective stop should be used to mitigate risk, along with a starter position that is half, or less, normal size. This initial position could be added to if the stock proves itself. In most cases, a position should not be entered when price is extended, i.e. more than 5% past the top of its base for purchases.

Amazon.com, the favored stock of this column for at least a couple of years, was, like Facebook, discussed favorably in the Jan. 27 column. A pullback to the $860 area could be contemplated as a first entrance.

Chart created using MarketSmith

For a larger version of the chart, click here.

Netflix

NFLX, -0.41%

was discussed positively in a late-December column. Like Facebook and Amazon, it offered an attractive entrance then. At this juncture, though, it is about 6% extended above its most recent support area and should be avoided, pending a pullback.

Chart created using MarketSmith

For a larger version of the chart, click here.

Tesla

TSLA, +4.36%

another liquid glamour, could use a pullback to place it closer to its most recent support area. This happens to be the six- or seven-week, cup-shaped base and close to the 50-day moving average. The 50-day is a popular area for investors to step up and add to a position.

Chart created using MarketSmith

For a larger version of the chart, click here.

Elsewhere, Adobe Systems

ADBE, +0.17%

TAL Education Group

TAL, -0.95%

Momo Inc.

MOMO, +1.19%

Weibo Group

WB, +1.98%

and Exelixis

EXEL, -1.59%

not all liquid glamours, should be added to a “watch” list.

In sum, while speculators should not attempt to predict a general market direction, there were a number of hints recently, listed above, that were enough to keep the momentum player on the right side of the market.

These characteristics have been repeatedly mentioned in this column. They remain intact, suggesting the bull market is set for further upward revaluation, though not without some inevitable corrective action that is part and parcel of every primary advance.

Students of the market should study these characteristics and consider adding them to their tool kit.

For intraday market comments and stock ideas: https://twitter.com/mardermarket

Earnings estimate data provided by Thomson Reuters.

The views contained herein represent those of Marder Investment Advisors Corp. (“MIAC”). At the time of this writing, of the stocks mentioned in this report, Kevin Marder and/or MIAC held no positions, though positions are subject to change at any time and without notice. Neither MIAC nor any of its affiliates will be liable, and we accept no liability whatsoever, for any losses any recipient of this report may suffer as a result of his or her or its use of this report or any of its contents.

About admin