Morning Report – February 25th, 2014

The major stock indexes broke out to new intraday highs, but profit taking at the end of the session pushed the SP back below a closing record.  The NASDAQ Composite did manage to close above its multi-year high, but closed at 53.46% of its daily range, up .7% for the day.

There were a couple of negatives about yesterday’s action, the late afternoon sell-off, or profit taking, and the lack of participation with advancing issues only leading declining issues in the Composite by a 1.82 to 1 margin.  On a breakout to new highs, I would expect broader participation.  The third chart below shows the SP1500, a combination of large, mid and small cap stocks, and although it did better, the index only generated a 2.41 to 1 margin for advancers vs. decliners.  The advancing volume divided by the declining volume was only 1.66 to 1. To me, this indicates that the hot money is chasing fewer stocks. This does not mean that the market is going to roll over, but the lack of participation is something to be aware of. Read Full Report