Tuesday, February 28, 2012

Market Madness Daily Market Update - 2/28/12

Maybe not so much "madness" in the markets today really. But an interesting day to watch nonetheless.

Markets finished largely higher today after another relatively volatile day. Despite moderate gains in the S&P, with Financials and Tech as the leaders we only achieved a drop of 1% in the VIX, after yesterday's 5% jump.

But...BUY BUY BUY! "(channeling Jim Cramer)
New post recession highs are in! DOW above 13k!
I'm "reliably" told, quite frequently, by many friends on CNBC that this means we should be buying with both fists so we don't miss out like suckers!
Are you buying into the Market Madness yet? We're not quite sold yet ourselves and will need to see at least two things before jumping in to any large degree. 1) Fundamentals strengthening. More follow through on the positive economic metrics that have started showed up of late (surprising us we must admit) would be a good start. 2) Price confirmation from here. I'd like to see a convincing stand above this level, with consolidation and tests of the level as new support. If I saw those two things I think I would have to change my thesis.

We're going to take a closer up look at the SPX and RUT today with some intraday charts using 30d/1h candles. First the SPX where we can see that even on an intraday basis it never really has broken its trend line since the rally really got its footing after the Christmas break. And actually appears to be strengthening with each test of that line. But if this rally is to continue small caps and other high beta issues must join in the party.

Which brings us to a look at the small cap RUT index. Also utilizing 30d/1h candles for this chart.
We see quite a different story here. Here we have a trend line that goes back five months being broken last week. And failure to recover and get back above it since that time. Worse than that the index has been utterly flat going back to the 2nd of Feb. Nearly a whole month now. Pretty ugly. This was also the only major index today to finish in the red, by about 1/3 of a percent, the same amount the SPX finished in the green by. This performance will need to change soon for this rally to have real legs.

And to update on silver from earlier, futures finished up at roughly where they were when the mid-day update was posted, at around $37 flat. Take a look at this jump. Impressive!

Best of luck to all from Market Madness.
Be safe out there!

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