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March 8, 2014 – Weekend Market Comment

March 8, 2014 – U.S. stocks staged a mixed finish Friday, with the S&P 500 ending at another record, as investors tracked the standoff in Ukraine and after February's jobs report indicated the harsh winter could be the culprit behind recent weakness in economic data.

Up for a fifth consecutive week, the Nasdaq fell 15.9 points, or 0.4 percent, to 4,336.22, up 0.7 percent from the week-ago close.

I am concerned that this rally is getting long in tooth and stocks are overdue for a corrective period. First, let's consider the reasoning behind today's rally. Stocks were down on Monday because the markets were spooked by the situation in Ukraine. The first trading day of the month normally has a huge bullish bias, because fund managers typically put new month to work at the beginning of each month. Buyers held back on Monday because of the situation in Ukraine and this created pent-up demand, which was subsequently released on Tuesday.

Overall all indicators are positive, clearly the market is overbought, but that is a positive thing until it breaks down and you can never tell when that is. 

The NYSE Hi Lo Graph is looking very positive:

The Primary Sell model is looking strong:

The VIX or fear gauge is on a steady slow towards optimism:

The Green Arrow graph continues to climb:

TLT is continuing to sell off, indicating that hedge funds are rotating out of bonds and into equities.

If you want to worry about anything, look at NetSuite this week, this stock is held by a lot of funds and it tends to sell off as the rest of the market is peaking. 
I used a stop to get me out with a nice profit.

How to Play This.
Well you can ride it further, but this might also be a wise time to raise your stops and sell your biggest winners. You can always play something more conservative when overbought, for example DVY in place of some of the more volatile stocks.