March Outlook

As of today the S&P, Dow and Nasdaq are all up about 4% YTD.  The Indices are all moving at about the same pace.  The leader to the upside has been the Nasdaq but as of late the Nasdaq has struggled more than the Dow and the S&P.  The Nasdaq is usually the leader of the market in terms of percentages.  They usually outperform to the upside and exaggerates the downside.  Which ever way the Nasdaq starts to head this month the other two markets will probably follow.  The bulls have a thorn in their side  and that is Crude Oil.  Now that Crude Oil is comfortably above 100 I believe that is a problem for stocks.  If Crude continues on its run we will probably start to fall.  The other factor in the market that I believe could hurt stocks is that Gold made new highs for the year.  Gold opened this year on its high and was down about 7% at one time only to rally back and now go higher for the year.  I believe this is a problem for stocks because high Gold prices tell us that there is still fear in the market.  Aside from all the issues that are bad for the stock market the tape itself is not telling you to be worried if you are long.  I believe that the recent move down in equities has held areas of importance.  I watch the 50 day moving average because so many funds and institutions watch this average.  It becomes a big pivot for the market just because so many eyes are on it.  As of right know that moving average is 1293.54 and we are holding an up trend from Sep. 2010.  Failure at this trend line should result in a test of the 50 day moving average and that is where the market will show its true colors.  The rest of this month I will be listening to news in the Middle East and the price of Crude Oil, but I will also be focusing my attention as to whether or not we get a Dow Theory confirmation to the downside.  The Dow Jones Transports are well below their 50 day moving average and have confirmed to be in bear territory but the Dow Jones Industrials have not yet confirmed. A Dow Theory confirmation would change the trend of the primary market from bullish to bearish.  The DJI has to close below 11823.7 to confirm Dow Theory.  If this happens I believe that this will pull all Indices lower and the correction that is widely talked about will begin.  Until then and only until then will I become a bear in this market.  I will be eagerly waiting to see what happens.  I have attached some charts below to show you what I have been talking about.  I hope everyone has a great month.  Thanks, Anthony (DELI)
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