Weekly Market Commentary 2.21.14

The stock market rally that began on February 3rd continues to persist,
almost daily.  The Standard & Poors 500 Index ($SPX) has only had two down days in that time.  Even so, there is some question as to whether it has the strength to overcome what is
stubborn resistance at 1850.

Equity-only put-call ratios gave appropriate sell signals in
January, but once the stock market turned higher, these ratios just
moved sideways. This is indicative of somewhat heavy put buying during the rally.
Market breadth oscillators continue to remain overbought and on buy signals.

A $VIX close above 16 would be a close above the moving average, and that would
be negative.  Otherwise, the market can continue to rise while $VIX
bounces around at low levels.

In summary, $SPX has undergone a 100-point round trip down
and up in a short period of time.  This has confused both humans and
technical indicators.  But it seems certain that 1850 will be an
inflection point — that is, the market will move away from this level
with some force.  LM