STTG Market Recap March 10, 2014

Indexes sold off quite sharply early in Monday’s session as a very bad export number out of China raised worries about global growth, but the conditioned dip buyer ran in after the morning selling and took stocks to nearly unchanged by the close.   The S&P 500 fell 0.05% and the NASDAQ 0.04%.   If you haven’t already heard, Sunday was the 5 year anniversary of the bull market bottom (March 9, 2009).

China’s exports unexpectedly tumbled 18.1 percent in February, against expectations for a 6.8 percent rise, swinging the trade balance into deficit and adding to fears of a slowdown in the world’s second-largest economy.

We saw the NASDAQ again pull back to its 10 day moving average and bounce while the S&P 500 did not even fall that far.

spx

nasdaq

It is worth noting that the NYSE McClellan Oscillator went negative today for the first time in quite a while.  Generally we want this to remain positive during bullish moves.  It might be warning of some potential degradation coming as breadth narrows.

nymo

Facebook (FB) was an outlier today after UBS raised its price target on the online social media giant to $90, from $72.

fb

We mentioned the housing stocks early last week in a potential bullish flag but that has become a bit unwound the past few sessions.

itb

One name just for fun today is Plug Power (PLUG) – this is a fuel cell company that was a momentum favorite over half a decade ago, which just announced some news with Walmart.  You can see its performance and volume explosion as it has come back to the radar of traders… pretty funny actually to see old names like this recycled as flavors of the day.

plug

One item for the longer term to keep in mind is IPO issuance.  Much like margin debt it can show at the margin frothiness in the market.  We are now seeing levels last seen in 2007 and 2000, the last 2 market peaks.

In a scramble reminiscent of the 1990s Internet heyday, companies are going public at the fastest pace in years, hoping to take advantage of booming share prices and investor demand while they last.  In the first two months of this year, 42 companies went public in the U.S., raising $8.3 billion and tying 2007 for the busiest start to a year for initial public offerings since 2000.  In some respects, the IPO market is even hotter now than it was in 2007, on the eve of the financial crisis and, like 2000, a year in which the stock market peaked. By one key measure, investors are bidding more aggressively for newly minted shares this year than they have in more than a decade, paying a median 14.5 times annual sales, compared with six times in 2007.   So far this year, nearly three-quarters of companies that have gone public are unprofitable.

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