Bulls could not have asked for more this week – after a sharp bounce late last week, indexes either went up or sideways each day this week as our “V shaped” bounce off of oversold levels is happening yet again. This despite some soft economic news throughout the week. The S&p 500 gained 0.48% while the NASDAQ was up 0.08% Friday. For the week, the S&P 500 rose 2.3% while the NASDAQ added 2.95. The S&P 500 now stands just 0.5% away from its all-time closing high. There were a few economic data points on the day:
U.S. export prices rose 0.2 percent in January, the third straight monthly increase in a potentially positive sign for global economic demand and the outlook for American manufacturers. In the latest data point affected by harsh winter weather, factory production fell 0.8 percent in January, the biggest drop in more than 4-1/2 years. Investors have been willing to forgive soft data of late, attributing weak results to bad weather as opposed to a slowing economy.
We are still in up, up, and away mode in the indexes. It will be interesting to see if the NASDAQ spikes all the way up to the top purple line before it makes any meaningful rest.
You can see volatility has plummeted in the past week and a half.
Silver was highlighted earlier this week (thanks to a reader comment), and we mentioned it needed to clear this purple downtrend line to make a move. Well it looks like we were not the only ones who thought that….look at this pop after clearing resistance.
Just as a warning for you short term oriented traders out there, we are at one of the most overbought moments in the NYSE McClellan Oscillator over the past year. Meaning even bulls could use a rest for a day or two.
It was a tough day in certain corners of the consumer space as Weight Watchers International (WTW) plunged after it forecast a full-year adjusted profit far slimmer (pun intended) than estimates, and GNC Holdings Inc (GNC) tumbled as the health supplements retailer posted weaker-than-expected quarterly results.
With WTW we see a stock that did not rally at all with the market during the late 2013 surge, a clear warning sign.
As for GNC once a stock falls below it 50 day moving average, if there is not a quick recovery back above it, it usually is a good bearish signal.
Have a good weekend and we’ll see you back here Monday.