About Me

Retired chief investment officer and former NYSE firm partner with 40 years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Tuesday, February 25, 2014

Stock Market -- Short Term

My view since early Feb. is that I would be content to see the SPX trade in a range of 1750 -
1850. As well, although no harm has been done yet, it has been fair to warn short term traders
about the inability of the SPX simply to take out the 1848 closing top which has now been
hit several times since the end of 2013.

Just why the SPX has been so balky is far from clear. Liquidity growth sponsored by the Fed
is decelerating, but is still strongly positive yr/yr. Economic data has been mixed, but the
winter has been severe over the eastern two thirds of the US as can be seen via fast rising
heating fuel and electric power usage costs. There has also been some 'risk on' diversification
into commodities, PMs and euro bourses and some safety preference for Treasuries and
corporates. The inflation rate has accelerated but is still low.

From a technical perspective, the current rally from the end of January is not unreasonable in
the short run and both RSI and MACD are positive. The % of stocks in bullish patterns is
down from earlier in 2013 but remains well above 50%. So unless there is a special data point
such as the employment report late next week or the next FOMC meeting, the SPX really should
move above 1848 resistance. After the resistance tops in earlier in Jan., there was a sharp
reaction, but here we are right back up for another test of the top line. We'll just have to see if
there is a strong warning or not.

SPX Daily

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