Monday-Wednesday’s Action: Cyprus Fears Weigh On Stocks

Thursday & Friday’s Action: Cyprus Fear Eases

Stocks fell on Thursday as the ongoing drama continued with Cyprus. The latest chatter suggested Cyprus might leave the Euro. The country’s parliament is believed to have taken measures to merge two of its largest banks and impose capital controls in an attempt to stem significant outflows. Put simply, this is not a pretty picture. Economic data in the US was mixed to mostly positive as labor conditions, leading economic indicators and the Philly Fed improved and new home sales slightly missed estimates but are continue to move in a healthy direction. Talks between Cyprus and Russia fell apart on Friday but stocks rallied as hope spread that the tiny country will be bailed out.

Market Outlook: Uptrend

The market is strong as the bulls continue to quell the bearish pressure. Until the market breaks and closes below its 50 DMA line- the bulls deserve the benefit of the doubt. As always, it is extremely important to be flexible in your approach and change when the facts change (Thank you Mr. Keynes). For those of you that are new to our work, on October 9, we said “the rally was under pressure” and then said the “rally was over” on Oct 19. Immediately after that note was published, stocks fell sharply and a lot of technical damage occurred. Then we put out a note on Friday, November 16, 2012 (the exact low for this move) titled, “Time For A Bounce” and the rest is history. Most recently, on Wednesday, February 20, 2013 we sent out a note saying, “Time For A Pullback” and a week later on Feb 27, 2013 we sent a note saying “Bulls Quell Bearish Pressure.” Stay tuned as we will continue to keep you in sync with the market and ahead of the crowd. As always, keep your losses small and never argue with the tape.