Monday, March 31 2014
Retest of Highs?
Indices had a very good day, gaining on average about a percent, while small-caps lead with a surge of 1.79%. Volume was below average, though. The OBV (On Balance Volume) indicator is still sloping down and below its 20 DMA, so at least one more day to the upside on good volume is needed to confirm upside market momentum.
Market Breadth Index, the $VMBI, has improved significantly. This indicates broad participation in this rebound that started 3 days ago. We are almost ready to remove Bear Warning.
TLT lost a quarter of a percent, but printed what appears to be a Shooting star. Coupled with a fact that TLT is overbought, a retest of the up-sloping 50 day moving average, currently at $107.20, is likely.
EEM continued the strong rally for the 8th day straight! No market goes straight up, so a throwback is just around the corner. Strong resistance is at $41.85, while good support now exists at $39.07. We will wait for the throwback to add to our open position
Gold should soon find support…or completely collapse to the $1180 area. A failure in the $1260 area, would be very bearish.
GDX may have already found support.
IYR is holding up well and is consolidating between $65.89-68.07. A close above $68.54 would continue this rally.
Natural gas seems to be making lower highs and lower lows. A close below $4.262 should cause further selling down to around $4
Oil may have run into resistance at $102.20. It needs to push higher and close above $102.91 to prove this rally, otherwise if it rolls over, a retest of January low is likely.
Bottom line: Markets seem to have worked through the weakness and are preparing for a push higher.
Open positions: GDX, IYR, TLT, DVY, ETV, EEM
Hedging positions: SDOW, DGAZ
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