Equity Markets Starting To Show Signs Of Weakness
Friday, February 22, 2013
Stock Market Commentary:
Monday-Wednesday’s Action: Markets Pullback
Thursday & Friday’s Action: Distribution
Stocks fell on Thursday as investors digested a slew of mixed economic data. The big miss came from the Philly Fed index which fell to -12.5 in February from -5.8 in January. Existing home sales rose by +0.4% to a seasonally adjusted rate of 4.92M which matched estimates. The bullish part of the report was that the supply of new homes plunged to the lowest level since December 1999. The Conference Board said its leading economic index rose to +0.2% to 94.1 in January which missed the Street’s expectation for a gain of +0.3%. The Labor Department said weekly jobless claims rose 20k to 362k which topped the Street’s estimate for 355k. The consumer price index allayed inflation woes and was flat for a second consecutive month. Stocks bounced on Friday but volume, a critical component of institutional demand, was lighter which is not a healthy.
Market Outlook: Uptrend Under Pressure
From our perspective, the market rally is under pressure as the major averages pullback towards support. 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.” 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.