STTG Market Recap March 28, 2014

Stocks shot out of the cannon early Friday on some positive economic data plus hopes there would be more economic stimulus coming out of China and Europe, but gave back much of those gains later in the day as the NASDAQ continues to be a source of weakness.   The S&P 500 added 0.46% while the NASDAQ gained 0.11%.

A report Friday had consumer spending rising 0.3 percent in February after climbing by a revised 0.2 percent in January. Income rose 0.3 percent last month after rising by the same margin in January.  The Thomson Reuters/University of Michigan index found consumer sentiment hit 80 in March, just below an 80.5 estimate.

Overseas:

In a speech reported by state media on Friday, China’s premier indicated the Beijing government was prepared to take action to bolster the world’s second biggest economy, saying the government would gradually roll out targeted measures to help economic activity.

This is day 3 the NASDAQ is below its long term lower trend line.  The S&P 500 on the other hand came back over its upper intermediate term trend line after a 1 day break.

spx

nasdaq

One group work pointing out is the troubled emerging markets.  This group has been under pressure for most of 2014 but earlier this week broke a longer term downtrend.  If we can continue to see this sort of follow through we might have a change in trend, although in the near term we’ve seen quite a strong pop. Here is the ETF for the group.

eem

Tesla Motors (TSLA) jumped after the National Highway Traffic Safety Administration said it had closed its investigation into fire accidents of the electric-car maker’s Model S vehicles, but the agency added its move did not mean it had found a safety-related defect did not exist.  Tesla has already had an amazing year, rallying 100% before this recent pullback; we are currently in a channel downward; usually moves out of this sort of channel/flag can be powerful to the upside.

tsla

As mentioned yesterday we are seeing a rotation into energy stocks – large cap Halliburton (HAL) is an example.

hal

Biotechs continue to be in a world of hurt however – see Gilead Sciences (GILD) which has yet to find a floor.

gild

Per SentimenTrader the bullish outlook continues to be extreme:

Active investment managers have continued their extreme exposure to stocks. Even the most bearish manager is net long stocks, according to the National Association of Active Investment Managers. This week’s data show the average exposure, spread between most bullish and most bearish managers and confidence among all managers is at extremes seen only two other times in the 8-year history of the survey. Those were early January 2007 and early January 2014. Both times proved to be somewhat troublesome for the most bullish managers in the weeks ahead.

Have a good weekend and we’ll see you here Monday.

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