Doc Barter Market Musings - Feb 13th

                               13 February 2011

Market Still Rising

The S&P500 made on Friday 11 February 2011 new highs and closed at 1329.15. Considering the time of my last article dated 29 January 2011, that was an impressive rally from 1275 level.  The price action breaking 1291 got even me fooled and I assumed pre-maturely a bit more down side to come. That being said, I did mentioned 1265-1260 level to be broken to determine a change of trend. Well, this level can now be lifted upwards at 1291. Unless they are broken, the SPX has further upside potential. A move towards 1377 ( ca 78.2% retrace from March 2009 and October 2007) is now next primary target it seems. To determine if the market after this impressive run from August until February without any correction can go indeed further, we shall look at several indicators.

Nasdaq 100

Last time it was discussed that Nasdaq 100 showed weakness but weekly chart had no sell signal. Well, the NDX rallied strong and made new highs. Volume picked up and  short term we are overbought.

(chart courtesy of stockcharts.com)

S&P 500

29 January 2011 , I mentioned that 1 day sell off does not justify to turn into bearish mode. It seems the assumption played out correctly. The daily chart suggests we are due for a minor pullback and as it stands, the 10 EMA in daily is offering support (ca 1313-1315)

(chart courtesy of stockcharts.com)

Transport Index

We  saw lately the Transport Index showing weakness and causing a divergence to the rise in the DOW. Well, this has been taken care of as the Transport bounced nicely and created a short term buy signal.

(chart courtesy of stockcharts.com)

Gold-GLD

2.5% long positions was taken in PM stocks on 27 January 2010 with a cautionary flag up as HUI had no confirmed buy signal according to weekly chart. The stocks did rally but last 2 days showed weakness.

The danger of further decline is still present and I wish I could tell better news in this sector. GLD would need to rise above 134 USD to turn bullish. HUI needs to rise above 545 level.

(charts courtesy of stockcharts.com)

GLD

HUI

SUMMARY:

Below comments per indicator

NYSE Tick

Tick saw a massive jump !

McClellan

very positive!

NDX Summation

Very important as Summation looks extremely bullish upon crossing. See last crossings

Advance-Decline Market Breadth

Up/Down Volume Market Breadth

Dow Theory

For our Dow Theory lurkers, the Transport Index has recovered.

Summary:

Gold - > still has a valid sell signal

Silver -> still has a valid sell signal

HUI  -> still has a valid sell signal

USD/EUR -> $ last time 29 Jan was may bounced. It did now bounce.

Stocks still outperforming bonds -> SPX/Bond Ratio very overbought

Bonds signaled a valid bounce and I expect more gains

VIX turned down again and is neutral

Natural Gas has turned neutral

Note: If market continues rally without a decent correction, we might see a large blow like………

Remarks:

I would like to point out that Tim Knight has a great website and he and his Moderator Iggy aka Fast Finger Bacon are doing a great job to keep it a fantastic site as of course the site of buddy Lotion Boy is. Tim Knight being a bear is often misinterpreted being a bear. A lot of lurkers with inappropriate comments do forget he picks very often stocks long or short going in his direction. Being a bear in macro economic view does not mean he is not able to make profits. Instead he DOES ;-)

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