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Title: Don’t Get Swept Away by Surge
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URL Source: http://www.moneyandmarkets.com/dont ... -away-surge-76174#.Vs2SldC4QQk
Published: Feb 23, 2016
Author: Jon Markman
Post Date: 2016-02-24 06:30:33 by BTP Holdings
Keywords: None
Views: 37
Don’t Get Swept Away by Surge Jon Markman | Tuesday, February 23, 2016 at 7:30 am 61 Jon Markman Stocks rallied 6% off their Feb. 11 low – accomplishing more in three days than they did in the prior 26 months. Here are a few reasons: — An epic short squeeze, to be sure. Stocks that rose the most were the most shorted. — A much-stronger-than-expected retail sales report on Feb. 12. — Deutsche Bank’s surprise announcement that it wasn’t dead yet and would buy back debt. — JP Morgan chief Jamie Dimon throwing down a $25 million bet on his company’s stock, and by extension pledging that he believes the violent bank sell-off has been overdone. By the time the panting was over with the surge last week, the S&P 500 had recorded back-to-back-to-back 1% gains for the first time since October 2011. Now that’s what I call a Presidents’ Day, if you consider that U.S. currency is highlighted by the faces of presidents. Yet there are reasons to be skeptical. Here are a few proposed by Bespoke Investment Group analysts: — Since last May, there have been eight prior bounces that stalled out without making a new high. — Prior periods where the S&P 500 has seen back-to-back-to-back 1% rallies have typically been followed by short-term weakness or consolidation (we can’t rally 1% every day). Turbulent Times Ahead! It was during the Iraq War that one of my investment recos could have made you nearly THREE TIMES your money in just one year — turning every $10,000 into nearly $30,000 in exactly 12 months. Another investment in this period rose 196.8%. That why I urge you to read my latest e-book, Winds of World War III … You’ll get the facts you need to protect yourself, along with what you need to do to prepare for this last great bull market. In fact, I’d like to send you a FREE copy of Winds of World War III right away, just click here! –Larry Internal Sponsorship — Even after the big rally, the S&P 500 and the other major averages are still down on the month and below their 50-day moving averages. Therefore, however impressive the rally was to the upside, it didn’t match the magnitude of the decline that preceded it. — Big gains like the ones we have seen are more often than not associated with periods of turmoil rather than sustainable uptrends. This is a topic we have covered often. All the big gains in market history have come in bear markets, not bull markets, which tend to feature steady but not flashy gains. — All four major index charts still show a lot of technical damage. No highs since the middle of last year. All four also have downward sloping 50-day moving averages, which they are all trading below. And all four are trading under their 12-month averages as well. — Volume has been weak, mostly due to the holiday weekend. Since the close of Feb. 11, not a single trading day has seen above-average volume. At five trading days and counting, this is the longest streak of below-average volume this year. Low volume is not necessarily a bad sign, but more is better for validation. Buyers can bulldoze their way through each of these negatives if bears decide to stand aside and lure them into further complacency at higher levels, so we are now entering into a very exciting, dangerous, challenging part of the program. 
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