I’m Bullish, but Not Ready to Buy

by Sam Collins | February 26, 2014 2:43 am

I’m Bullish, but Not Ready to Buy

Stocks flatlined Tuesday due to weak economic data, taking all three major indices to small losses. The Dow industrials fell 0.17%, and the S&P 500 and Nasdaq were both off 0.13%.

Consumer confidence fell to 78.1 in February from a revised 79.4 in January, and the S&P/Case-Shiller 20-City Home-Price Index rose 13.4% year-over-year in December, where 13.6% was expected.

Despite a slight drop in the technology sector, biotech stocks were strong with the iShares Nasdaq Biotechnology (IBB[1]) rising 0.42%. The consumer discretionary sector was strong, led by Home Depot (HD[2]), which was up 4%. The company reported better-than-expected earnings and issued positive guidance, but missed on revenues.

Financials, health care and the technology sector slumped during the final hour of trading, dragging the S&P 500 to a minus for the day.

At Tuesday’s close, the Dow Jones Industrial Average was off 27 points at 16,180, the S&P 500 fell 2 points to 1,845, and the Nasdaq was off 5 points at 4,288. The NYSE’s primary market traded 647 million shares with total volume of 3.5 billion shares. The Nasdaq crossed 2.1 billion shares. Decliners outpaced advancers by 1.2-to-1 on the Big Board, and on the Nasdaq, decliners outnumbered advancers by 1.5-to-1.

02 26 14 nyse 300x192 I'm Bullish, but Not Ready to Buy
Click to Enlarge

chart key 300x84 I'm Bullish, but Not Ready to Buy[3]

Like the S&P 500, the NYSE Composite is making its third attempt at a breakout. And also like the S&P 500, it made a new high on Monday, but failed to follow through Tuesday.

The bounce from a sell-off low at its 200-day moving average early in February has run into minor resistance, but the recent new high, a neutral RSI and a bullish MACD are encouraging signs.

Conclusion: The bulls are still charging and making slight headway against a barrage of bad news. It is considered a very favorable sign when the market fails to fold under that kind of negative pressure. Therefore, I remain bullish but still not prepared to initiate new positions until buyers push the major indices safely through what has been very tenacious resistance.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here[4].

For a list of this week’s economic reports due out, click here[5].

Endnotes:
  1. IBB: http://studio-5.financialcontent.com/investplace/quote?Symbol=IBB
  2. HD: http://studio-5.financialcontent.com/investplace/quote?Symbol=HD
  3. [Image]: http://investorplace.com/wp-content/uploads/2013/05/chart-key.gif
  4. click here: http://www.bloomberg.com/apps/ecal?c=US
  5. click here: http://www.bloomberg.com/markets/economic-calendar/

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