The benchmark S&P 500 (SPX) surged to another record high last week which illustrates how strong the bulls are right now. In the past 5 weeks, from the Feb 5th low of 1737, the S&P 500 jumped a very impressive 8.4%. Remember, in a normal (non QE) world, a 10% move for the entire year would be considered healthy. So +8.4% in 5 weeks is very powerful and speaks to how strong the bulls are right now. Remember markets do not go straight up so be careful chasing stocks that have already had big moves up here. A better approach that has worked very well for us over the years is to buy weakness in uptrends, not just strength. In the short term, the market is clearly getting extended and a light volume pullback into the 50 dma line would do wonders to shake out the late-longs. Meanwhile, the intermediate and long term outlook remains very strong.
MON-WED’S ACTION: STOCKS Surge to New Highs
Over the first weekend in March, Russia invaded Ukraine and stocks gapped down on Monday. Fear was elevated, rumors were flying that Putin would become the next Hitler, this would become Obama’s Bay of Pigs, etc..etc. As a testament to how strong the bulls are right now, the sell-off lasted less than one day. Cooler heads prevailed and Putin pulled back by the end of the day. John Kerry landed in Ukraine on Tuesday and fear subsided very quickly. After the one day sell-off, the bulls returned and sent stocks soaring on Tuesday, helping it become the strongest day of the year. A slew of high beta stocks soared as well after a very brief and healthy pullback. The broad gains sent several key indices soaring to fresh highs and/or 2014 highs which is very encouraging.
Stocks were quiet on Wednesday as investors digested the recent and robust rally. The latest economic data was mixed to slightly lower. The Fed’s Beige Book confirmed that the harsh weather caused a slowdown in economic activity across much of the country. Elsewhere, the ADP said US employers added 139k new jobs in February, missing estimates for a gain of 160k. The ISM service index also missed estimates and the miss was written off due to – you guess it- weather. A slew of financial stocks soared as capital began to flow back into this area.
THURS & FRI’S ACTION: Bulls Are In Control
Stocks opened higher on Thursday after the ECB held rates steady and fear around the situation in Ukraine continued to ease. Crimea’s parliament, the Russian-heavy region in Ukraine, voted to join Russia and scheduled a referendum for March 16 on the move. Before Friday’s open, the Labor Department said US employers added 175k new jobs last month. This beat estimates and January’s reading was revised up to 129k. Separately, the unemployment rate unexpectedly rose to 6.7 percent.
MARKET OUTLOOK: STRONG UPTREND
The market is following our script perfectly. In late Jan/early Feb we wrote saying that this appears to be another normal (and healthy) pullback within a broader uptrend. That is exactly what occurred. As always, keep your losses small and never argue with the tape.
Host Of The #SmartMoneyCircle Podcast, Founder and CEO of 50 Park Investments. Adam provides weekly market updates to ChartYourTrade.com readers. He is a FORBES Contributor and is a frequent guest on all the major financial media outlets.
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Disclaimer: All communication from ChartYourTrade is general in nature and for educational and general informational purposes only. Under no circumstance should it be considered personalized investment advice. All our work is general in nature and not specific to any one person. All the information on this site and/or that originates from us, or any of our partners or affiliates, is for educational and informational purposes only and is NOT a recommendation to buy or sell anything. To avoid any conflicts of interest, we do not have a working relationship with any of the companies mentioned in our work. Furthermore, we may have a long, short, or no position in any, or all, of the names that appear in our work and they may change at any time without notice. Investing and trading in capital markets or using margin carries a high level of risk and may not be suitable for all investors. Leverage can work against you as well as for you. Before you decide to invest or trade in capital markets you should carefully consider your investment objectives, level of experience, and risk appetite, among other factors. The possibility exists that you could sustain a loss of some, all, or more of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with capital markets, investing/trading, and seek specific investment advice from an independent financial advisor and other professionals. Remember all the information we provide is for educational and general informational purposes only and is subject to change without notice.
Week In Review- Stocks Soar To Fresh Highs; Russian Tensions Linger
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STOCK MARKET COMMENTARY:
FRIDAY, March 07, 2014
MON-WED’S ACTION: STOCKS Surge to New Highs
Over the first weekend in March, Russia invaded Ukraine and stocks gapped down on Monday. Fear was elevated, rumors were flying that Putin would become the next Hitler, this would become Obama’s Bay of Pigs, etc..etc. As a testament to how strong the bulls are right now, the sell-off lasted less than one day. Cooler heads prevailed and Putin pulled back by the end of the day. John Kerry landed in Ukraine on Tuesday and fear subsided very quickly. After the one day sell-off, the bulls returned and sent stocks soaring on Tuesday, helping it become the strongest day of the year. A slew of high beta stocks soared as well after a very brief and healthy pullback. The broad gains sent several key indices soaring to fresh highs and/or 2014 highs which is very encouraging.
THURS & FRI’S ACTION: Bulls Are In Control
MARKET OUTLOOK: STRONG UPTREND
The market is following our script perfectly. In late Jan/early Feb we wrote saying that this appears to be another normal (and healthy) pullback within a broader uptrend. That is exactly what occurred. As always, keep your losses small and never argue with the tape.
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Disclaimer: All communication from ChartYourTrade is general in nature and for educational and general informational purposes only. Under no circumstance should it be considered personalized investment advice. All our work is general in nature and not specific to any one person. All the information on this site and/or that originates from us, or any of our partners or affiliates, is for educational and informational purposes only and is NOT a recommendation to buy or sell anything. To avoid any conflicts of interest, we do not have a working relationship with any of the companies mentioned in our work. Furthermore, we may have a long, short, or no position in any, or all, of the names that appear in our work and they may change at any time without notice. Investing and trading in capital markets or using margin carries a high level of risk and may not be suitable for all investors. Leverage can work against you as well as for you. Before you decide to invest or trade in capital markets you should carefully consider your investment objectives, level of experience, and risk appetite, among other factors. The possibility exists that you could sustain a loss of some, all, or more of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with capital markets, investing/trading, and seek specific investment advice from an independent financial advisor and other professionals. Remember all the information we provide is for educational and general informational purposes only and is subject to change without notice.
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