Tuesday, March 18, 2014
Stocks and Bonds Gain
Stocks continued their 3 day rebound lead by NASDAQ and the Small Caps. Should the Russell 2000 Small Cap index close above $1212.82, we will close our hedging positions. Market Breadth Index, the $VMBI, is signaling a possible continuation of the up-move that started in early February. Wednesday Federal Reserve statement should provide further clarity on market direction.
TLT also gained. Which makes us wonder why in the face of a very strong show put on by the stock market, treasuries are refusing to drop? We believe it is because uncertainty and fear are very much alive and well in the markets and are expressing themselves via a demand for the United States Treasury Bonds. A close above $109.18 for TLT would continue this rally.
Emerging markets also gained. As mentioned in the previous market commentary, we are waiting for a strong close above $40.22 or below $37.05 in EEM to shed the light on direction.
Gold continued its loosing streak. There is decent support in the $1331 area. Should that give, next support is at the 200 day moving average (DMA), currently at $1302
IYR is holding up well, but is still stuck in the trading range between $67.49-68.69. A close would indicate a re-test of early March high. A break down - and we are likely going to see the 50 DMA around $66
Natural gas lost about a percent. We are likely going to see a retest of March 14 low at $4.341
Oil may have found at least a temporary support. A close below $97.37 should cause further selling to the $91-92 area.
Open positions: GDX, IYR, TLT, DVY, ETV
Hedging positions: TZA, SDOW, DGAZ