Art Cashin said the benchmark S&P stock index is approaching a key technical level that could spark either big gains or big losses. Cashin, UBS' director of floor operations at the NYSE, told CNBC's Bob Pisani around midday he expects a "great flirtation" with the S&P's old highs. He sees a significant band of resistance around 1848 to 1851. "If they approach that and get repelled again you could get a pretty severe pullback... If they get through that you may get some stampede buying from short-coverers…” Story and video at…
The above video was published at 1:50 PM Friday. I must point out that the S&P 500 hit 1846 just after 11AM and was unable to push higher. The index fell for most of the remainder of the day Friday. Monday, the same pattern followed. The markets made the old high but couldn’t remain above it. Time is running out for the push above 1848. Perhaps the index will make it Tuesday.
THE
BIGGEST GAINING STOCKS ARE COMPANIES THAT ARE LOSING MONEY (Bloomberg)
“I would associate wild speculation in this
type of companies with a near-term top of the market,” Wilbanks, [Wayne
Wilbanks of Wilbanks, Smith & Thomas Asset Management LLC ] based in
Norfolk, Virginia, said in a Feb. 19 phone
interview. “People bid these things up like crazy. The fact they’re so strong
right now means we’re probably not quite there yet as far as the market rolling
over.” Story at…
http://www.bloomberg.com/news/2014-02-24/greed-turning-losers-to-leaders-in-russell-1000-index.html
MARKET REPORT
Monday, the S&P 500 was up 0.6% to 1848 (rounded) as
the index closed at its prior high forming a Triple Top going back to 31
December. The so-called smart money
(those who trade the last hour) apparently didn’t like the intra-day new-high
today and sold the rally into the close.
VIX was down about 3% to 14.23.
The yield on the 10-year Treasury Note rose slightly to
2.74% indicating bond buying overall.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing fell to 62%
at the close. (A number above 50% for
the 10-day average is generally good news for the market.) New-highs outpaced new-lows Monday, leaving
the spread (new-highs minus new-lows) at +230. (It was +157 Friday). The 10-day moving
average of change in the spread was +17. In other words, over the last 10-days,
on average, the spread has increased by 17 each day. Up volume fell again on
the day, and the 10-dMA is now falling so I judge internals to be neutral due
to falling up-volume.
In addition, some 10-day new-high/new-low stats are slowing
rapidly. This can indicate a coming
reversal (or not). It doesn’t always
work. Deteriorating internals at the
new-high are not encouraging, but it doesn’t guarantee the market will fail here.
We saw about a 3% gain in November 2013
on falling internals.
Market Internals are a decent trend-following analysis of
current market action, but should not be used alone for short term trading.
They are usually right, but they are often late. They are most useful when they diverge from
the Index. In 2013, using these internals
alone would have made a 16% return vs. 30% for the S&P 500 (in on Positive out
on Negative – no shorting). Of course,
few trend-following systems will do well in an extreme low-volatility,
straight-up year like 2013.
NTSM
The NTSM system remained HOLD today, Monday. The first Sell signal of this cycle was just
over 2-weeks ago on 24 January. I expect we’ll either get a buy soon, if the market
climbs much higher, or market internals will lead the index down.
All NTSM indicators are now neutral. The 5-10-20 Timer remains neutral as do the
Market Internals.
MY INVESTED POSITION
I am about 40% invested in stocks because I upped my
stock holdings by 10% on 12 February (S&P 500-1819) based on Market
Internal signals. This is a conservative
allocation, but putting a bit more into stocks recognizes that the market
internals are improving on the S&P 500 and the “correction” may once again
confound the bears. Can you say March? I’ll
reassess at the end of the month and add more or pull some out depending on
indicators. The end of the month is
Friday so I’ll have to make a decision by then to game the 401k rules in my retirement account.
