The S&P 500, blue-chip Dow industrials and small-cap Russell 2000 were all fractionally higher for the week, but the tech-laden Nasdaq 100 — which tends to lead the market both higher and lower — was down almost 1% and led Friday’s sell-off following the March jobs report. All of these major indices are negative for 2014 except for the S&P 500, which is up just 1%.  My own metric shows that investor assets most aggressively moved into industrials and health care last week, and out of financials and utilities. In last week’s Market Outlook, I mentioned that investor assets most… Read More

The S&P 500, blue-chip Dow industrials and small-cap Russell 2000 were all fractionally higher for the week, but the tech-laden Nasdaq 100 — which tends to lead the market both higher and lower — was down almost 1% and led Friday’s sell-off following the March jobs report. All of these major indices are negative for 2014 except for the S&P 500, which is up just 1%.  My own metric shows that investor assets most aggressively moved into industrials and health care last week, and out of financials and utilities. In last week’s Market Outlook, I mentioned that investor assets most aggressively moved into the energy sector, which actually was the second consecutive week that energy attracted the most new assets. The Energy Select Sector SPDR (NYSE: XLE) has outperformed the SPDR S&P 500 (NYSE: SPY) by 4% since March 20, as our asset flow metric tends to slightly lead relative performance. As long as assets allocated to the energy sector continue to expand, this sector outperformance is likely to continue. Bearish Key Reversal Day Adds To Ongoing Dow Theory Warning Signal =Since the March 10 issue, I have been pointing out that the March 7 new 2014 closing high… Read More

Being the “little guy” in the markets is never easy, it seems. #-ad_banner-#The recent airing of a “60 Minutes” special concerning high-frequency trading (HFT) and Michael Lewis’ new book, “Flash Boys: A Wall Street Revolt,” went into detail on how retail investors are being duped by this new wave of algorithmic gurus and computer experts. Lewis’ book has sparked controversy across the investing community, with the “Liar’s Poker” author claiming the stock market is “rigged.” Some high-frequency firms argue the heat is unwarranted, saying they provide liquidity and keep fees down. Just how bad investors are being affected… Read More

Being the “little guy” in the markets is never easy, it seems. #-ad_banner-#The recent airing of a “60 Minutes” special concerning high-frequency trading (HFT) and Michael Lewis’ new book, “Flash Boys: A Wall Street Revolt,” went into detail on how retail investors are being duped by this new wave of algorithmic gurus and computer experts. Lewis’ book has sparked controversy across the investing community, with the “Liar’s Poker” author claiming the stock market is “rigged.” Some high-frequency firms argue the heat is unwarranted, saying they provide liquidity and keep fees down. Just how bad investors are being affected and just how much money is being made from HFT practices have been debated since the program aired. Ignoring the noise and concentrating on the actual problems present in the market’s current structure, increased complexity and poor regulation are two real drivers that have had a tangible malevolent impact. While attempts have been made in the past to level the trading playing field, the end result has often been segmentation, reduction in liquidity — and fatter pockets for those who created the “solution.” That is, until now. A large component of the “60 Minutes” special outlined the debut of a… Read More

The Dow Jones Industrial Average was the only major U.S. index to post a positive close for the week of March 24, but it was a meager 0.1% gain. Meanwhile, the tech-laden Nasdaq 100 and small-cap Russell 2000, both of which led the 2013 broad market advance, were down by 2.2% and 3.5%, respectively, for the week. Year to date, the broad market S&P 500 is the only major index in positive territory, up just 0.5%. #-ad_banner-#From a sector standpoint, my own ETF asset flow metric indicates that investor assets most aggressively moved into energy and consumer staples last week,… Read More

The Dow Jones Industrial Average was the only major U.S. index to post a positive close for the week of March 24, but it was a meager 0.1% gain. Meanwhile, the tech-laden Nasdaq 100 and small-cap Russell 2000, both of which led the 2013 broad market advance, were down by 2.2% and 3.5%, respectively, for the week. Year to date, the broad market S&P 500 is the only major index in positive territory, up just 0.5%. #-ad_banner-#From a sector standpoint, my own ETF asset flow metric indicates that investor assets most aggressively moved into energy and consumer staples last week, and most aggressively moved out of health care and industrials. Nasdaq 100 Closing In On Downside Target In last week’s Market Outlook, I pointed out an emerging bearish chart pattern in the market-leading Nasdaq 100 index. The head-and-shoulders indicated that a decline below underlying support at 3,617 would confirm the pattern and target an initial 3.4% decline to 3,530.  The chart shows the index declined below 3,617 support on Monday, March 24, subsequently collapsing by 110 points, or 3%, into Thursday’s 3,543 low before finishing the week at 3,571. Last week’s breakdown below… Read More

Over the past few quarters, there have been rumblings that the bull market is getting long in the tooth, and the time is at hand to shift more assets into cash.#-ad_banner-# To be sure, the direst predictions about the market have simply not come to pass. Yet the recent market performance may not be as impressive as you think. As an example, though the Nasdaq composite index has staged some impressive mini-rallies in the past few quarters, it’s really treading water. The day after Christmas, the Nasdaq stood at 4,167. Three months later, it has fallen to near 4,150. The… Read More

Over the past few quarters, there have been rumblings that the bull market is getting long in the tooth, and the time is at hand to shift more assets into cash.#-ad_banner-# To be sure, the direst predictions about the market have simply not come to pass. Yet the recent market performance may not be as impressive as you think. As an example, though the Nasdaq composite index has staged some impressive mini-rallies in the past few quarters, it’s really treading water. The day after Christmas, the Nasdaq stood at 4,167. Three months later, it has fallen to near 4,150. The key concern is that a sideways market often portends a broader directional shift. The major averages get stuck in a range as buyers continue to pour funds in and a similar number of investors head for the exits. Often times, the buyers can get fatigued, and sellers start to take control. To be sure, the market (as viewed by the Nasdaq) has been stuck in a few ruts over the past year and managed to reach new heights in subsequent months. But before you conclude that this is just another consolidation phase before the next upward move, take… Read More

Investors tend to give their portfolio half of the attention it needs. #-ad_banner-#They add stocks and funds to the mix, presumably making a commitment in dollar value that is commensurate with the perceived risk of any investment. But once an asset makes it into their portfolio, they don’t always actively monitor how the investment is faring — or how it fits in with the changing economy. Years may pass before you take a fresh, deep look at what you really own. I have met many investors who own a hundred stocks or more, simply because they could never know when… Read More

Investors tend to give their portfolio half of the attention it needs. #-ad_banner-#They add stocks and funds to the mix, presumably making a commitment in dollar value that is commensurate with the perceived risk of any investment. But once an asset makes it into their portfolio, they don’t always actively monitor how the investment is faring — or how it fits in with the changing economy. Years may pass before you take a fresh, deep look at what you really own. I have met many investors who own a hundred stocks or more, simply because they could never know when to sell any particular investment. Here’s a simple, four-step method to make sure your portfolio is in fighting shape. 1. Focus On Weightings It’s often wise to let your winners ride, especially if the news that propelled shares higher continues to flow. But your best portfolio picks can eventually start to account for an outsize portion of your portfolio. There’s no great rule of thumb about how much is too much, but generally speaking, any one holding that has come to represent 15% or 20% of your portfolio needs very close scrutiny. Unless you have done an… Read More

All major U.S. stock indexes closed higher for the week of March 17, led by the broad market S&P 500 (+1.4%) and Dow industrials (+1.5%). For the year, only the small-cap Russell 2000 (2.6%) and tech-laden Nasdaq 100 (1.7%) are positive. #-ad_banner-#Global stock markets were led lower by Russia and China. In the March 17 Market Outlook, I said I was expecting an additional decline of about 2% to 21,000 in China’s Hang Seng Index. Last week, the Hang Seng declined as expected, hitting a low of 21,137, and appears headed for a test of major support at 20,800. Heading… Read More

All major U.S. stock indexes closed higher for the week of March 17, led by the broad market S&P 500 (+1.4%) and Dow industrials (+1.5%). For the year, only the small-cap Russell 2000 (2.6%) and tech-laden Nasdaq 100 (1.7%) are positive. #-ad_banner-#Global stock markets were led lower by Russia and China. In the March 17 Market Outlook, I said I was expecting an additional decline of about 2% to 21,000 in China’s Hang Seng Index. Last week, the Hang Seng declined as expected, hitting a low of 21,137, and appears headed for a test of major support at 20,800. Heading into this week, the major European stock indexes are all situated just above major underlying support at their 200-day moving averages. This is where their larger cyclical uptrends should aggressively resume from, if still valid. Nasdaq 100: A Leading Indication of What To Expect This Week In my March 10 report, I said that momentum in the S&P 500 was still positive, but getting a bit frothy, indicating that the market was probably going to have increased difficulty continuing higher without a correction first. The U.S. broad market index is virtually unchanged since then. Last week, I pointed out… Read More

As you may have noticed, the stock market has sent investors on quite a ride already this year. #-ad_banner-#The market lost nearly 7% in just a couple of weeks between mid-January and early February, sparking fears that a sharp correction was imminent. Those fears have turned out to be a bit premature, as the market has since nearly recouped those losses. Hype and perception often have a more powerful effect than reality on short-term stock price movement. It may seem counterintuitive, but that’s the typical pattern. Of course, many other factors can cause stock prices to drop. Macroeconomic fears affect… Read More

As you may have noticed, the stock market has sent investors on quite a ride already this year. #-ad_banner-#The market lost nearly 7% in just a couple of weeks between mid-January and early February, sparking fears that a sharp correction was imminent. Those fears have turned out to be a bit premature, as the market has since nearly recouped those losses. Hype and perception often have a more powerful effect than reality on short-term stock price movement. It may seem counterintuitive, but that’s the typical pattern. Of course, many other factors can cause stock prices to drop. Macroeconomic fears affect the broad market in a negative way, and individual stocks can get knocked down for dozens of reasons: missed earnings estimates, poor quarterly results, negative rumors, management shenanigans, even simple profit-taking. The good news is that savvy investors can profit from this inevitable negative stock market action in three primary ways. 1. Shorting Shares The most popular way to profit from a down market or stock is through shorting. This means you place a trade in anticipation of the price falling rather than appreciating. I know it sounds complicated, but it’s actually quite easy. The way it works is, your… Read More

All major U.S. stock indices closed lower for the week of March 10, basically giving back all of the previous week’s gains. The market was led lower last week by the blue-chip Dow industrials, which lost 2.4%, leaving the Nasdaq and Russell 2000 as the only two major indices that are still in positive territory for 2014, up 1.7% and 1.5%, respectively, year to date.#-ad_banner-# U.S. stocks were particularly weak on Thursday, with the S&P 500 suffering its worst day since early February on rising tensions between Ukraine and Russia and concerns about a slowdown in China. Regarding the latter,… Read More

All major U.S. stock indices closed lower for the week of March 10, basically giving back all of the previous week’s gains. The market was led lower last week by the blue-chip Dow industrials, which lost 2.4%, leaving the Nasdaq and Russell 2000 as the only two major indices that are still in positive territory for 2014, up 1.7% and 1.5%, respectively, year to date.#-ad_banner-# U.S. stocks were particularly weak on Thursday, with the S&P 500 suffering its worst day since early February on rising tensions between Ukraine and Russia and concerns about a slowdown in China. Regarding the latter, I am expecting at least an additional 2.2% decline in China’s Hang Seng Index to 21,000. Dow Theory Non-Confirmation Persists In last week’s Market Outlook, I said, “The deeper that we go into 2014 without a confirming new high in the Dow, the more problematic it can eventually become from a Dow Theory standpoint.” As you can see in our first chart, the new 2014 closing high in the Dow transports set on March 7 of 7,592 versus the Jan. 23 high of 7,570 still has not been corroborated by a new high in the Dow industrials — and… Read More

In recent days, the financial press has been filled with stories regarding the fifth anniversary of the current bull market. The market bottom came in on March 9, 2009, and few would have guessed that the next half-decade would bring such terrific market action. #-ad_banner-#Yet March 9 also stands out to investors for another reason: Back on March 9, 2000, the Nasdaq Composite Index hit 5,000 for the first time ever. A few days later, the index went into freefall, eventually moving below 1,500 a few years later. (In a potentially eerie parallel, the Dow Jones Industrial Average has closed… Read More

In recent days, the financial press has been filled with stories regarding the fifth anniversary of the current bull market. The market bottom came in on March 9, 2009, and few would have guessed that the next half-decade would bring such terrific market action. #-ad_banner-#Yet March 9 also stands out to investors for another reason: Back on March 9, 2000, the Nasdaq Composite Index hit 5,000 for the first time ever. A few days later, the index went into freefall, eventually moving below 1,500 a few years later. (In a potentially eerie parallel, the Dow Jones Industrial Average has closed lower in each trading session since March 9, 2014.) The reason for the demise of the Nasdaq in general and dot-com stocks in particular back in 2000: Valuations had become disconnected from the fundamentals. There was simply no way to justify stock prices in the context of sales or profits, and many investments became known as “story stocks.” More than a decade removed from the dot-com bubble, it’s easy to forget that painful lesson. But you shouldn’t. This chart shows us that another bubble appears to have formed — and once again, it involves dot-com stocks. While the… Read More

All major U.S. stock indices closed higher for the week of March 7, with the small-cap-laden Russell 2000 leading the way with a 1.7% gain. In my Feb. 24 Market Outlook, I pointed out that three major U.S. indices — the Dow industrials, Dow transports and Russell 2000 — had yet to set new 2014 highs.#-ad_banner-# As of Friday, only one index is left without a new year-to-date high, the Dow industrials. Overall, this is positive for the broad market as the various U.S. indices are now for the most part confirming each other’s recent strength. However, the deeper that… Read More

All major U.S. stock indices closed higher for the week of March 7, with the small-cap-laden Russell 2000 leading the way with a 1.7% gain. In my Feb. 24 Market Outlook, I pointed out that three major U.S. indices — the Dow industrials, Dow transports and Russell 2000 — had yet to set new 2014 highs.#-ad_banner-# As of Friday, only one index is left without a new year-to-date high, the Dow industrials. Overall, this is positive for the broad market as the various U.S. indices are now for the most part confirming each other’s recent strength. However, the deeper that we go into 2014 without a confirming new high in the Dow, the more problematic it can eventually become from a Dow Theory standpoint. The Dow finished last week at 16,453, just 0.7% off its Dec. 31 all-time high. Market Momentum Still Bullish, but Becoming a Bit Frothy In my Feb. 18 report, I said that the bellwether S&P 500 was at a near-term inflection point according to market momentum, from which its larger 2013 advance should resume if still valid. The index set a near-term low at 1,825 two days later, on Feb. 20, and has since risen… Read More