Weekly Updater Stock Market Commentary 21th Feb 2014

By Lawrence G. McMillan

The stock market rally that began on February 3rd continues to persist, almost daily.  The Standard & Poors 500 Index ($SPX) has only had two down days in that time.  Even so, there is some question as to whether it has the strength to overcome what is stubborn resistance at 1850.

Equity-only put-call ratios gave appropriate sell signals in January, but once the stock market turned higher, these ratios just moved sideways. This is indicative of somewhat heavy put buying during the rally.

Market breadth oscillators continue to remain overbought and on buy signals.

A $VIX close above 16 would be a close above the moving average, and that would be negative. Otherwise, the market can continue to rise while $VIX bounces around at low levels.

In summary, $SPX has undergone a 100-point round trip down and up in a short period of time.  This has confused both humans and technical indicators.  But it seems certain that 1850 will be an inflection point — that is, the market will move away from this level with some force.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s