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February 7, 2015 – Weekend Market Comment

February 7, 2015 – U.S. stocks closed down on Friday, ending the week significantly higher, amid continued concerns over Greece and a strong jobs report that renewed the possibility of an earlier Fed rate hike.

The Dow Jones Industrial Average closed up 3.84 percent for the week, its best week since January 2013 and posting gains of 1.22 points for the year. The Dow Jones Industrial Average closed down 60.50 points, or 0.34 percent, at 17,824, with Verizon leading and Intel the greatest blue chip laggard. The S&P 500 closed down 7.05 points, or 0.34 percent, at 2,055, with utilities leading eight decliners and telecoms and financials leading advancers. The Nasdaq closed down 20.70 points, or about 0.43 percent, at 4,744. Two stocks declined for every advancer on the New York Stock Exchange, with an exchange volume of 927 million and a composite volume of 4.2 billion in the close.

What I Think
Volatility is with us and what was looking gloomy last week has become a nice bounce. Clearly we are still in a bull market, and also stuck in a volatile trading range. This week (see below S&P500 chart) we broke the recent peeks in a breakout (green arrow) and we should be clear to go up to the all time peek (red arrow) that should be resistance. 

Well Mr Bond, it looks like there is an end to your relentless march. US 20 year treasuries can be bought long under the ETF TLT and short under the ETF TBT. Below is the chart of the short US treasury ETF getting a bounce after a 40% move down.
This is a very positive thing for equities as investors flee bonds.

It All Shows Up In The Charts . . . 

Bull Bear Lines

Nice bounce and the bull continues.

Primary Sell 
Clearly the market pros are not really embracing this rally. This should be pointing up more.

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.

On Balance Volume is keeping pace with the current market showing that institutional large volume buying is still active. Yes I see the one day of divergence, but for now close enough. 

Green Arrow Graph
Our Green arrow graph just drew a new green arrow, time is ripe for market entry.

Nasdaq Summation
The Nasdaq Summation index shows that is is good time to be in high tech Nasdaq stocks. Again hesitantly.

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 financial stocks.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, edged higher to trade near 18. You can learn more about the VIX index here.

There is plenty to worry about, but stocks do climb a wall of worry, as long as the Bull Bear lines are happy you need to be ready to believe in the market. I am particularity glad to see a ray of hope coming from the NASDAQ Summation index. It looks ready to turn up as investors get a bit of faith.  

The markets' ability to climb a wall of worry reflects investor confidence that these issues will be resolved at some point. However, market direction once the wall of worry has been surmounted is impossible to ascertain, and depends on the stage of the economic cycle at which it occurs. 

In short: 

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

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CLICK HERE: To see the 100 and 200 series charts

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