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Chaikin Market Insights - March 9, 2014

|Includes: MYL, Target Corporation (TGT)
March 6, 2014: 5th Anniversary of Bear Market Low - Market at New Highs Up 182%

The S&P 500 Index closed at 1,878.04, up 1% on the week. The market sold off on Monday to support at the 1,835 level based on fears of an escalation of hostilities in Russia's intervention in the Ukrainian situation. This turned out to be a gift to investors looking to put money to work on dips, as the market rallied to close Friday at a new bull market high.

The Russell 2000 small cap Index did even better than the S&P 500, rallying 1.7%, but the Nasdaq Index lagged because of profit taking in the leading Biotech stocks. Market breadth continues strong and bond yields rallied only slightly in spite of better than expected economic numbers. The general feeling continues to mirror our long espoused view that the U.S. equity markets are attractive relative to international alternatives because of our slow growth economic recovery, excess corporate liquidity and the uncertainties in China and the emerging markets.

What's Ahead for the Stock Market?

I am a bit concerned that there is a consensus building that the Nasdaq will surpass its all time high of 5000 before this bull market is over; a gain of 14% from current levels. However, that is not enough to encourage me to lighten up on stocks - yet. I have always harbored the view that if the Nasdaq made a new high above 5000, the markets would be vulnerable to a steep sell-off. For now let's enjoy this breather before 1st quarter earnings reports due out in mid-April give the markets a sober view of where the economy is going in 2014. I continue to believe that we will see 1,900 - 1,950 on the S&P 500 Index before we need to take money out of stocks. Seasonality remains positive into mid- April, but a peak in our target zone is a distinct possibility after that. We just returned from a brief holiday in South Florida where there appears to be a building boom. That's reason enough for caution if the stock market gets ahead of itself in April.

Last week's bullish stock of the week

Mylan Inc $MYL, spiked up to a new high at 57.20 but finished the week at 54.86, down 1.3%. $MYL continues to be attractive as a long term investment with strong participation in the growth of the generic drug market. The stock pulled back to a low of 53.65, close to our ideal buy price of 53.

Our Bearish stock of 2 weeks ago Target $TGT gave up some of its recent gains and finished the week at 60.75 down 2.86%. This retailer with a bearish Power Gauge rating should be out of investor's portfolios.

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