Little Rays of Sunshine in the Markets

It’s 10 degrees where we are today, and it’s been cold here for a long. We’re hoping each day for more sun and warmth. Similarly, it’s been very cold for a long time in the stock markets. We are also hoping each day for stocks to move out of the deep freeze.

By no means are we stock bulls yet, but there are some other things moving. Clearly Treasuries have blossomed and gone by. Investment grade corporate bonds and municipals bonds have recovered nicely from the Q4 lows. Gold is strong. The Yen is very strong, and the Dollar is doing pretty well. Below investment grade corporate bonds and preferred stocks show some signs of life, but with high risk abounding.

Among individual securities, there some strong performers. The following list is not a set recommendations, but it may be thought stimulating.

We screened all US stocks for those where shorter simple moving averages are higher than longer simple moving averages. Specifically, the 5-day SMA > 10-day > 20-day > 40-day > 80-day > 160-day > 320-day.

From that set of criteria, 14 companies pass. That is not many out of thousands, but it’s better than none. They are shown in the chart below.

click image to enlarge

(Securities in table: ESI, MYGN, CEPH, COCO, IDCC, VRX, NJR, SINT, SJI, MNRO, CHG, SXCI, SHM, OSIR)

A more sober and comprehensive view comes from these four indicators about the 500 constituents of the S&P 500 index, which we believe still has potential for substantial declines, as well as potential for substantial rallies:

• 48.6% (243 co’s) with bulllish Point & Figure charts
• 51.2% (256 co’s) with price > 50-day SMA
• 9.4% (47 co’s) with price > 150-day SMA
• 6.6% (33 co’s) with price > 200-day SMA.

The S&P 500 is spending a lot of time in a range between roughly 800 (750) and 950 (1000) trying to decide which way to go. We need to watch and see which way it breaks.

Below is a 1-year weekly chart with 13-period price channels (orange) and a 13-week simple moving average (red) — proxy fund SPY.

click image to enlarge

Comments

[Dan Jacome:]

SXCI broke out this week, so did HMSY

Feb 06 07:55 AM

[ain't no fo...:]

Waiting to see which way it breaks before committing large $$ is the key. The VIX is stuck between its 50 EMA above and its 200 EMA below... if it breaks out above its 50 the market should get hit, conversely a breakdown below its 200 would set us up for a major rally. Its a tight formation right now.

The good news for longs is there are lots of nice solid 3 month flat and inverse head and shoulders bases setting up on stocks, ETF's and indices that could make nice moves on a breakout.

Feb 06 01:22 PM

[Dan Jacome:]

MYGN had one of the best quarters I've seen in a LONG time since the recession began...

Feb 09 12:03 AM