A late day bounce pushed stocks well into the green after the morning began well in the red due to some weakness overseas, especially in China, which had its worst day in two years due to additional government property controls to try to slow down the real estate market. The market does remain resilient even as small caps have lagged for a few weeks and defensive sectors have taken over the leadership of late. While the bounces are coming on light volume, and the selloffs on high volume in the end the price is the price and its not rolling over. The S&P 500 gained 0.46% and the NASDAQ 0.39%.
The S&P 500 is at a critical point, the late day push moved the index to the exact spot it has been rejected multiple times the past few weeks - 1525. A push over this level and 1528 takes it to new highs.... and also get it back within that ascending channel it has fallen out of the past two weeks. That said, notice how volume has dropped off on days like today.
The NASDAQ continues to rotate between fall 2012 and spring 2012 highs.
I want to highlight Apple (AAPL) today as it was once again a black sheep in the rally, but also to show how a gap fill works. Back in January 2012 the stock gapped up (denoted by the blue lines) and now, well over a year later, the stock has come all the way to fill the gap. That's what you call a round trip.
On the more pleasant side two of the three major leaders of this advance in NASDAQ land had stellar days - Google (GOOG) and LinkedIn (LNKD). Both pushed out of their respective bull flag formations.
Some other groups that have had stellar 2013s are the airlines and refiners - here are example charts from each sector; both groups were extremely strong today.
Last, we have an interesting note from SentimenTrader which we'll put with the other cautionary signals.
One of the charts we've updated for over a decade looks at the "net worth" or available cash to investors using margin in their brokerage accounts. Margin debt has been used for decades as a sentiment indicator, though it is only half of the equation. Free credits are also reported along with margin debt, and those free credits are essentially cash that can be withdrawn from the account.
So to get the net worth figure, we subtract margin debt from the free credits to get an aggregate estimate of the net debit or credit sitting in margin accounts. That net worth showed a massive negative drop in January.In December, the available cash was negative $19.2 billion. In January, it plunged to negative $77.2 billion. Other than an outlier in September 2008, that's the largest one-month negative change in net worth in history. As we can see from the chart above, there have been three other times net worth dropped this low, and each time it coincided with a drop in stocks going forward.
