The market closes the books on February ending higher for the third month in a row. At the close volume jumped pushing volume much higher across the board as institutions jockey for end of the month position adjustments. After the morning buying action the market experienced selling most notably in the NASDAQ as big tech stocks began to roll over. Buyers stepped up in after 2pm EST to push the NASDAQ back to its mid-point of the day while the Dow Jones Industrial Average finished just off the highs of the session. Small cap stocks and the NASDAQ lagged the S&P 500 significantly a red flag for the strength of this rebound. Not a terrible ending to what could have been a nasty roll over for the market.
Commodities continue to be a hot topic for the market and most notably Crude Oil. Crude fell today as riots in Libya and across the Middle East have appeared to subside over the weekend. Without the fear of a major supply shock, crude natural has moved lower. On the flip side, cotton closed limit up again as the commodity continues to power forward. Food and clothing prices are a staple for any consumer and any increase in prices will hit the pocket book hard. While housing may be a bigger input to inflation, the rise in food and clothing prices hit the poor the most. It is a hidden tax on all, but it is regressive in nature. The Federal Reserve should pay more attention to stable prices rather than trying to worry about inflation.
After breaking out the 5, 10, and 30 year yields have pulled back to their 50 day moving averages. Bond prices rose as fears from the Middle East clashes had investors rush to treasuries. Technically speaking yields continue to hold up well in spite of what the Middle East and other geographic areas have hit the market. Continue to keep an eye on yields as they continue to act well under the circumstances.
Last week in this commentary I had made mention to the market going into correction mode. Well, the sharp rebound hasn’t changed the stance yet. The action amongst leading stocks hasn’t been stellar and with only a few oil and gas plays leadership has remained thin. We could very well push this tape higher and attack the 2007 NASDAQ highs. However, anything is possible and playing great defense will allow you to take advantage of any situation. Stick to the signals given by price and volume action rather than opinion. As always, cut those losses short. Stock market trading you’ll need a stake to extract money from the market.
