Tuesday, March 04, 2014
S&P 500 over 1900 Next?
Stocks completely ignored all war fears, closed on new highs and printed bullish candlesticks. Small caps lead again with a 2.75% gain, while the Dow "languished", tacking on only 1.41%. The Dow is just over a percentage point away from making an all time high. Small Cap leadership reaffirms the strength of this rebound that started on February 5.
Market breadth remains very bullish. Our proprietary market breadth index, $VMBI, rebounded into the strongly bullish territory. We see no evidence of sustained selling pressure of any sort yet. Should this evidence materialize, we will take appropriate actions such as raising cash, or buying more treasuries.
Treasuries were the clear losers today closing down 1.50%. They gapped down and closed just off of the session lows almost printing a black marubozu. A close below the 20 day exponential moving average (eMA) would call this TLT rally into question, unless some other fears surface. Support is in the $105 area.
As the fears subsided, so did the price of gold. It closed down 1.18% to end at $1334.40 printing an Inside day. Should the fear continue to subside, a correction to the $1300 area could be in the cards - which would be healthy for the gold market.
GDX fared better, only loosing 0.76%. It is possible that GDX is building a base. It has been trading in the $25.56-26.95 area for the past 12 sessions. Bias is still bullish.
Emerging markets snapped back up, but on rather low volume. EEM is likely to consolidate more before a major move continues.
IYR gapped up and continued higher. I fear that real estate is becoming overextended and ripe for a correction. First support is in the $67 area.
Natural gas has seen some tremendous volatility lately, so forecasting its price is tricky. My best guess is a rise to the $4.90 area, followed by further drop to below $3.90.
West Texas Intermediate oil lost 1.46% today and printed an inside day. Momentum and volume patterns are still bullish so a run to the $108-109 area is possible.
We are long: GDX, IYR, TLT, DVY, ETV
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