Canaries in the Major Indices Singing Loudly

With stocks scoring new highs lately, it’s a good time to pay a visit to the canaries in the coal mine and see if we have any dead ones. For newer readers, Canaries in the Coal Mine is a semi-regular piece when stocks are near fresh highs or lows to signal a potential major trend change or warning sign. This analysis is not good at identifying routine and regular corrections or intermediate-term rallies.
In this first piece, we are going to look at the major stock market indices with the Dow Jones Industrials being first. As you can see below, after a multi-month period of digestion with more than a few pundits calling for the end of the bull market, the Dow gathered itself and saw all-time highs this

Almost the exact same comments can be made regarding the S&P 500 which is also sitting at an all-time high. Hard to argue with that!

The S&P 400 mid cap index is below and like the previous ones, it sits at yet another all-time high. Do you smell a trend developing here???

Just like with the others, but even more impressive, the Russell 2000 small cap index is next and sitting at all-time highs. This is probably the biggest “stick in the eye” to the bears because they were hanging their hats on the fact that the small caps performed so horribly last year, which would portend problems for the rest of the market in 2015. That scenario, which I totally discounted in my 2015 Fearless Forecast, was not to be had and the bears will have to find fault somewhere else.

Finally, the NASDAQ 100 is below and while it is not YET at the all-time level last seen in March 2000 which I forecast it will in the 2015 Fearless Forecast, it is, nonetheless, at fresh highs 14 year highs and still a bullish sign.

The takeaway from this section is that all canaries are happily signing loudly from a long-term perspective. We can and should see pullbacks and corrections along the way, but those should lead to more all-time highs down the road.

If you would like to be notified by email when a new post is made here, please sign up, HERE.

Homestretch

This is it. Three more trading days and 2014 will be in the books as they say. Just 8 trading days ago, the bears were beating their chests yet again about how the bull market ended or the stock market was in 10%+ correction or a whole host of other nonsense. I wrote it right at the October bottom and I did the same thing 8 days ago; the bull market is old yet alive and weakness should be bought right away. Don’t count out Ole Saint Nick! If you followed that advice you were instantly gratified.

Dow Industrials – All time highs

S&P 500 – All time highs

S&P 400 – All time highs

Russell 2000 – All time highs

Reread that last one. Russell 2000 all time highs. The index that was left for dead by all the bears. Where are all those naysayers now? Awfully silent!

The only major index still waiting to celebrate the New Year at a fresh high is the Nasdaq 100. The odds do favor this laggard stepping up over the coming weeks to join its cousins.

Year after year, I have written about the many crosscurrents this time of year to go along with some very powerful trends. Are they perfect? Not even close. Do they win 9 out of 10 years? Nope. But they do provide a much better than average result when followed properly.

Interestingly and uncharacteristically, we don’t really have a standout leader index since the December bottom. All of the major indices have basically seen returns in the same range, something I do not expect to continue. I am sure you are now wondering if I think everything is hunky dory and we should just mortgage the house and go all in to stocks. Absolutely not. The time to do that was in October or last January or many other short-term bouts of weakness since 2012.

As I wrote about over and over and over during the fourth quarter, it is beyond unusual to see a major peak late in the year, especially during an uptrend. There is little impetus to sell. And let’s not forget about the pension and mutual fund managers trailing their benchmark and in dire need to pay performance catch up.

But the calendar is turning this week and I do see some minor market cracks that need to be fixed. I don’t like that over the past three days stocks lost momentum during the afternoon and closed in the lower end of the daily range. I also want to see the high yield bond market regain its footing in the face of volatile energy prices.

This won’t be the last time I write this next comment. 2014 was hard to lose a lot of money and it was a tough year to make a lot of money. I don’t think we have the same landscape in 2015. Things are about to get really interesting…

If you would like to be notified by email when a new post is made here, please sign up, HERE.

The Most Hated Bull Market Continues

Yesterday, I spent a jam packed, fun filled day in New York City with client meetings and media interviews. Although I don’t enjoy the commute in and out of the city, I do enjoy the hustle and bustle as long as the weather is good since I like to walk as much as I can. I absolutely hate taking dirty, smelly cabs that take forever to get around, but I will hop on the subway when I have to go downtown.

I began my day with the good folks at Yahoo Finance creating three controversial segments. Jeff Macke, my favorite regular host who loves to disagree, ride me and try to get me out of comfort zone was on vacation so Milanee Kapadia filled in and did a masterful job. I really enjoyed chatting with her. She has a way about her interviews that is unique in today’s fast paced environment.

The first segment is below and it’s certainly not new to my readers who know I have and continue to believe that this is the most hated and disavowed bull market of the modern investing era.

“Hated” Bull Market

If you would like to be notified by email when a new post is made here, please sign up, HERE.