The Holbert Wealth Management Group | Palm Beach Gardens, FL

Shaking off more inflation concerns from China and despite trading on both sides of the “unchanged line” numerous times (the DJIA was down 53 points right out of the gate), stock market indices stabilized and garnered a late-day bid. At the final bell, the DJIA and the NASDAQ gained just over 44 points and nine points respectively. On the NYSE, while volume contracted to 982 million shares, advancing volume was 70% of total volume. There were 598 net advancing issues and only 284 new 52-week highs – concerning that this isn’t expanding. The Oversold – Overbought oscillator closed at plus 10.0, down from a peak reading two days ago of plus 10.9. Additionally, a 10-day average of the Arms Index is getting very close to an overbought reading --- relative to the meaning of “overbought” and a re-emergence of some short-term selling pressure, it’s getting interesting, very interesting!

Aided by another good session for the financials, the S&P 500 closed above its January closing high by 0.01. Many Bank stocks are completing low-level bases and look higher. The Bank Index (BKX) is following through from the completion of its bullish pattern of accumulation (continuation inverse head and shoulders), discussed Monday. One component stock, Strong Buy-rated U.S. Bancorp (USB/$25.47) is emerging out of another basing pattern – bullish! Stop loss points are strongly recommended, let me know if I can help.

Additionally, here is a follow-up to my early January recommendation of the iShares Dow Jones U.S. Regional Banks ETF (IAT).

Within the context of what I believe will eventually lead to a further move higher by the U.S. Dollar Index (80.31), on a short-term basis the U.S. Dollar Index has been banging against an area of selling pressure between 81.50 and 82. Additionally, it is losing some momentum. I think the index could realistically pullback towards 1) its rising 50-DMA, currently at 79.35 (moving averages marginally changes each day) or 2) towards its rising 150-DMA, currently at 77.62. This should produce a short-term oversold bid (upward price movement) to the CurrencyShares Euro Trust (FXE). Additionally, the commodities market should benefit.

Thursday Morning 03/11

Here are the most recent BULL - BEAR investment newsletter advisory sentiment figures and a paraphrase of a portion of the

We are seeing many indexes trading above their January highs. Also, the past week's trading has included a sharp increase in new upside breakouts. This signals an increase in the demand to own equities. The BULLS came in at 44.9%, showing a steady advance from the start of February when they numbered just 35.6%. Low levels of bullishness show many advisors are avoiding stocks and indicate plenty of cash on the sidelines. That allows for quick gains once the move higher begins. The BEARS also edged higher at 23.6%., showing that about 24% of the advisors are fairly committed to a negative outlook.

Relative to yesterday, while the small and mid-cap indices along with NASDAQ continue to extend their near-term uptrend, their large cap brethren, namely the S&P 500 and DJIA, continue to encounter selling pressure derived from their mid-January peaks. Regardless, the stock market as a whole was higher yesterday with the DJIA up almost three points; the NASDAQ exhibited good relative strength again, gaining just over 18 points. The DJ Transportation Average closed at a new recovery high Tuesday, above its 1/11/10 high and followed through yesterday. Government bailed-out firms rallied sharply

On the NYSE, volume marginally expanded to 1.14 billion shares. While volume was light, advancing volume represented almost 75% of total volume, a strong relationship. Signs of internal strength were evident as the NASDAQ and the breadth figures were strong throughout the session, even when the DJIA reversed from up 37 points to down 38 shortly after noon. At the close, there were 1058 net advancing issues and 424 new 52-week highs.

Under the heading “How strong is the U.S. consumer,” here is a chart of Gasoline ($2.28). From my understanding, in order to figure out the retail price (what you and I pay at the pump), we can add approximately $0.70 to the target price/retracement levels shown below. In this case, I could see “our price” rising to $3.24 to $3.30/gallon, minimum!

Finally, in looking back at some of my old notes I was fortunate enough to come upon a piece of “stock market wisdom” that a former colleague used to always stress, likely due to his years of experience, specifically:

I would point out that very often when the market approaches a significant level it usually does one of two things. 1) It pauses just below that level and then goes through, or 2) it moves though that level and then pulls back.

S&P 500 (1145.61): January peaks (resistance) are between 1148 &1150.45 (closing high = 1150.23). 3/10/10 intraday high =1148.

DJIA (10567.33): January peaks = 10709 to 10730 (closing high = 10725.43). 3/9/10 intraday high = 10613.

I think we are currently experiencing the “pause” or consolidation, and as long as the internals remain strong or volume doesn’t start expanding on “down days”, new reactionary highs by these indices are coming.

Wednesday Morning 03/10

Within the Business and Industrial Sector, one industry that was rated dually “Attractive” by Chief Economist Dr. Scott Brown and me in the January issue of the Sector Spotlight report was the Airline group.

The first chart shown below is one of the S&P’s economic sectors, specifically the Industrial sector. In reviewing the bullish chart configuration, I can make two observations. 1) With resistance closer to 285, this sector has at least another 10% upside before it will encounter the initial stages of resistance. 2) If the economy is going to “double dip” as “some” are espousing, why is the absolute and relative price trend (not shown) of this sector bullishly configured?

If I drill down deeper within the Industrial sector, shown on page two is the bullishly constructed S&P Midcap Airline group. I think the group eventually breaks out and tests the next area of overhanging selling pressure.

Finally, in carrying this thought process one step further and by combining both fundamental and technical analysis, I think proactive accounts should purchase Strong Buy rated Copa Holdings, S.A. (CPA/$56.54). Please use a violation of support as a stop loss point. Shown below and on page three are both longer-term and shorter-term charts of CPA, both of which are bullish.

Tuesday Morning 03/09

( Its a Matter of Perspective: All I have heard and read recently has to do with the anniversary of the March 2009 low. Yes, the S&P 500 has rallied 68% since recording a closing low of 676.53 on March 9, 2009. That is one perspective. Another perspective is that the S&P 500 (1138.50) was trading in the 1200 to 1300 range in March 1999 and was “in and around” 1142 in late June 1998.

Stock market indices ended Monday's session mixed after trading on both sides of the “unchanged line” as traders and investors attempted to digest last week's impressive gains. At the final bell the DJIA was down almost 14 points; the NASDAQ rallied almost six points. Besides weakness in Gold and Silver stocks, many subsectors within the Healthcare sector were lower as President Obama began a series of road trips in an attempt to jam through his desire to overhaul our country’s health-care system.

On the NYSE, volume contracted to 906 million shares. There were 488 net advancing issues, a good reading. Also, there were 470 new 52-week highs. Net-net, I’d classify yesterday as a good “fill-in” session. As March usually “comes in like a lion,” I would expect further digestion activity by the stock market – as opposed to a major decline – over the next few days/week.

As a side note, when it comes to the new 52-week high and low figures, since these statistics are based on a 52-week time frame and with the March 2009 low now be behind us, a sharp sell-off could lead to a pick-up in “new 52-week lows.”

Big Cap Stock Market Indices: S&P 500 (selling pressure = 1141 to 1151, initial support = 1110 – very short-term uptrend line drawn of 2/5/10 low) and DJIA (selling pressure = 10615 to 10730, initial support = 10400 – very short-term uptrend line) are still confined to a short-term trading range pattern.

Small and Mid Cap Stock Market Indices: the S&P 600 Small Cap and S&P 400 Mid Cap Indexes are at new recovery highs yet near “overbought” levels

Dow Jones Transportation Average: Approaching selling pressure between 4236 and 4266. Initial support exists around 4150.

Dow Jones Utility Average: I couldn’t have been more wrong in my positive near-term assessment of this index last December. Relative strength trend versus the S&P 500 is at a new low. The very near-term trend is trying to improve but a number of overhanging levels of selling pressure exists. Critical support exists “in and around” 360.

30-Year Yield Index (TYX/46.72): A massive topside breakout, meaning higher yields and lower bond prices, would occur at 48-49 or 4.80% to 4.90%.

U.S. Dollar Index: Banging into initial selling pressure between 81.50 and 82. A failure to get through this range will likely lead to a pullback towards the rising 50-DMA or rising 150-DMA, currently closer to 79 and 77.60, respectively.

Crude Oil: Within the context of “higher troughs and higher peaks” (an uptrend), Crude is stalling under initial selling pressure between $82 and $83.95 and appears ready to dip. Minor support is closer to $77; the rising 200-DMA (support) exists at $73.

Natural Gas: The near-term downtrend is finding support between $4.39 (rising 200-DMA) and $4.15. The Natural Gas stocks are trading much better than the commodity, with many exhibiting bullish chart configurations.

Gold: Long-term chart configuration is still bullish with important support closer to $1000. Intermediate-term configuration is neutral, and I wouldn’t be surprised to see another multi-quarter consolidation period develop. The near-term trend is bullish but will encounter selling pressure between $1150 and $1163. GLD has support at $106.60, $105, and $102.28. GLD encounters selling pressure just above $112 and $113.60.

Monday Morning 03/08

With the “troops” leading the “generals” (meaning the Advance – Decline Lines I monitor continuing to extend their moves into new high territory), the stock market reacted favorably to the employment report last Friday. I especially enjoyed watching Friday, how the DJIA held its early gains and “extended” as the day wore on. This was contrary to what had occurred earlier in the week when early morning strength was unable to hold up. At the final bell, the DJIA gained 122 points; the NASDAQ gained 34 points, closed above its January peak, and recorded a new recovery high! For the week, the NASDAQ surged 3.9%; the S&P 500 gained 3.1% while the DJIA added 2.3%.

On the NYSE, volume expanded to 1.05 billion shares. While this is still a light figure and clearly gives the bears something to complain about, advancing volume represented 92% of total volume. Maybe this type of volume relationship, coming after a 7.5% rally by the S&P 500 since its 2/5/10 low, can be considered “late in the game;” given all the positive internal readings that the stock market is exhibiting, it may lead to a period of “pause” as opposed to another major decline. There were 2,118 net advancing issues. While the number of new 52-week highs is still below the January peak reading of 523, the fact that since the “2/5/10 reversal” the number of new 52-week highs keeps expanding (Friday’s reading was 458), is bullish. Additionally, the stock market is not ready to respond to an overbought reading (Oversold – Overbought oscillator closed at plus 9.1) – impressive because a market that wants to go higher will get overbought and stay there.

Under the fear of “selling the strong and buying the not so,” here are two sector observations:

1) Following a 27% topside move over the past few weeks, as defined by the Biotechnology Index (BTK/1173.33), I am now being asked about buying the group. If you look at a chart of the BTK, it has taken on the look of a parabolic curve. While difficult to pick a top, history shows that parabolic advances rarely end well. Look for high volume reversals as signs of a climactic move. In the mean time, I have no problem tightening stops, hedging, or reducing positions in this group.

2) While the relative strength trend still isn’t bullish, the absolute price trend of the Bank Index (BKX/48.61) is on the verge of completing a bullish pattern of accumulation (inverse Head & Shoulders pattern). A violation of the “neckline” (resistance) will be confirmed by a move above 48.83. Given the “leading” nature of the financials for the stock market, a completion of the pattern by the BKX would be another bullish catalyst for higher prices. Given the depth of the base, a completion of the pattern would yield a target towards 56.

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Weekly Technical Commentary by Art Huprich

Clearly "Overbought" but Fully in Gear

Friday Morning 03/12

Thursday Morning 03/11

Wednesday Morning 03/10

Tuesday Morning 03/09

Monday Morning 03/08

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