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February 14, 2015 – Weekend Market Comment

February 14, 2015 – U.S. stocks closed at highs on Friday, with the Dow above 18,000 and S&P 500 setting a new record as firming oil prices sent the energy sector higher. The Dow Jones industrial average closed up 46.97 points, or 0.26 percent, to 18,019.35, with Caterpillar leading 16 blue chip advancers and American Express the greatest laggard. The last time the index closed above 18,000 was on Dec. 26, 2014. The S&P 500 closed up 8.51 points, or 0.41 percent, at 2,096.99, with the energy sector up 1.95 percent to lead six sectors higher and utilities the greatest decliner. The Nasdaq closed up 36.22 points, or 0.75 percent, to 4,893.84, its highest level since March 2000, the peak of the dotcom bubble. The Russell 2000 also closed at a record high. 

Amoung the good news, the European Central Bank allowed Greek banks to access extra emergency financing from the Bank of Greece because deposit outflows have increased and to ensure they have liquidity while discussions continue in Brussels next week, Greek banking sources told Reuters on Friday. Perhaps more importantly on Sunday, Russia is expected to enter a cease-fire with Ukraine as announced early on Thursday.

Recent data has been strong, especially the strong January employment report, further support PNC's baseline forecast for an initial increase in the Federal funds rate at the Federal Open Market Committee's July 2015 meeting

What I Think
Last week I ended with a big red BUY button and if you did you did very well this week. As you read a few weeks ago markets would be volatile until oil finds a bottom. The most important news this week is that oil might have bottomed. Stocks typically rally into idea that oil might be bottoming.

It All Shows Up In The Charts . . . 

Bull Bear Lines

Nice bounce and the bull continues, I do see that we are a bit ahead of ourselves and a small pull back would be ok. Notice the bounce in Slope... this could be another long term up trend. 

Primary Sell 
Clearly the market pros are now embracing this rally. Also looks like lots of room to run.

Aggressive Defensive Graph
The Slow Stochastics on the top of the graph has hit a new peak now black over red, Clearly aggressive equities are in play but perhaps already over done.

Bond vs Equities
Equities (stocks) outperform bonds this week. Risk on week.

S&P500 Over 50 Day
The percentage of stocks over the 50 day moving average is on rising as the market buy the dippers gobbles up bargains.

Green Arrow Graph
Our Green arrow graph just last week drew a new green arrow, when the time was ripe for market entry.

Nasdaq Summation
The Nasdaq Summation index shows that is is good time to be in high tech Nasdaq stocks. Full on bull run.

NYSE New High Low
Still showing strength on the big board.

Sector Rotation 
Great to see safety stocks particularly utilities decline and the new leader is consumer discretionary and the high tech stocks of the Nasdaq.
XLF - Financial Stocks - Dark Blue
QQQ - Nasdaq - Purple
XLY - Consumer discretionary - Green
XLU - Utilities - Red
DEF - Defensive stocks - Brown

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, dropped to trade near 16. You can learn more about the VIX index here.

Renko IWM  
Using a Renko chart, it is obvious that the market is near a point of resistance where it failed at before. 

On Balance Volume is not keeping pace with the current market showing that institutional large volume buying is lagging. It looks like the "dumb money" is pushing this round higher. Lets see if it catches up next week. This is the most concerning indicator. 

What Works Now

One January 24 I recommended an ETF called XIV -- up 9%

On January 24 I also mentioned MVV up about 10%

On January 24 I also mentioned FISV up about 12%

On January 24 I also mentioned juiced Nasdaq ETF...QLD up about 15%

Last week we got a nice strong buy signal. We could see a growing support for the tech heavy NASDAQ from the summation index and this was followed during the week by all most all the indicators getting stronger. I expect a small pause and a continuation.  

You can learn more about my indicators by visiting the CME4PIF school by clicking here.

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