Stocks Begin Up in February After Down January - Anything Interesting Here?
After falling in January, stock turned around to start February, up 305 points yesterday. Anything interesting going on here? Not especially, or perhaps maybe not yet.
Typically, if an item falls a lot it's going to reverse and correct itself. That's simply because prices don't head straight up or straight down. They zig and zag. Just look at any chart of prices of any item. That's the "not especially" part.
As for the "maybe not yet," we note that since December stocks have followed a potentially negative pattern: lower highs and lower lows. And so far that pattern hasn't been altered. In addition, another interesting tidbit occurred yesterday: The Dow rose to its 50-day moving average and stopped. So right now the 50-day represents resistance to the Dow rising. The S&P, on the other hand broke through its 50-day, but since that's just a one-day event, we'll have to wait a few days to see if that breakthrough turns out to be significant. Significant would be if stocks breach the resistance of the 50-day moving average, preferably both the Dow and the S&P for more than a day or two.
Of course, we could switch gears from the big stock indices (Dow and S&P) and look at the NYSE Index, an index that includes all New York Stock exchange stocks - a much broader measure. But that index has been a bit of a thorn in the bull's side, as it hasn't matched the succession of highs of the Dow or the S&P in 2014. It's been a kind of off-tune voice in a bullish chorus.
We could also talk about the Russell 2000 index which has also been a sour note in the bull symphony that began in 2009. (All these musical metaphors!) There we find the Russell hitting highs towards the end of 2014 after missing out on the highs hit parade all year. But (sigh), it's only managed a pattern of lower highs since then, following the Dow's pattern.
At this point, we could wait and watch to see if there's trouble brewing. We could, but then again, the overall pattern of bull market cycle - climbing a wall of worry with occasional sharp downdrafts - appears to be intact. And we've got to stretch a bit to consider these downdrafts all that sharp. After all, January's fall didn't even amount to 4%.
So we sit with our stock positions, neither adding nor taking away. And if you're positioned correctly, you can do something productive and enriching like maybe listening to Gillian Welch. Like maybe - and ironically - "Hard Times," which seem to be tapping (not knocking) on the door but never being there whenever we open it.
Typically, if an item falls a lot it's going to reverse and correct itself. That's simply because prices don't head straight up or straight down. They zig and zag. Just look at any chart of prices of any item. That's the "not especially" part.
As for the "maybe not yet," we note that since December stocks have followed a potentially negative pattern: lower highs and lower lows. And so far that pattern hasn't been altered. In addition, another interesting tidbit occurred yesterday: The Dow rose to its 50-day moving average and stopped. So right now the 50-day represents resistance to the Dow rising. The S&P, on the other hand broke through its 50-day, but since that's just a one-day event, we'll have to wait a few days to see if that breakthrough turns out to be significant. Significant would be if stocks breach the resistance of the 50-day moving average, preferably both the Dow and the S&P for more than a day or two.
Of course, we could switch gears from the big stock indices (Dow and S&P) and look at the NYSE Index, an index that includes all New York Stock exchange stocks - a much broader measure. But that index has been a bit of a thorn in the bull's side, as it hasn't matched the succession of highs of the Dow or the S&P in 2014. It's been a kind of off-tune voice in a bullish chorus.
We could also talk about the Russell 2000 index which has also been a sour note in the bull symphony that began in 2009. (All these musical metaphors!) There we find the Russell hitting highs towards the end of 2014 after missing out on the highs hit parade all year. But (sigh), it's only managed a pattern of lower highs since then, following the Dow's pattern.
At this point, we could wait and watch to see if there's trouble brewing. We could, but then again, the overall pattern of bull market cycle - climbing a wall of worry with occasional sharp downdrafts - appears to be intact. And we've got to stretch a bit to consider these downdrafts all that sharp. After all, January's fall didn't even amount to 4%.
So we sit with our stock positions, neither adding nor taking away. And if you're positioned correctly, you can do something productive and enriching like maybe listening to Gillian Welch. Like maybe - and ironically - "Hard Times," which seem to be tapping (not knocking) on the door but never being there whenever we open it.
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