Friday, March 26, 2010

SP500 technicals update[JPMorgan’s M Krauss] US equity strategy comments Asset flows $SPY

Markets Headlines

·         SP500 technicals update from JPMorgan’s M Krauss - Scores a 1180.68 bearish outside day, from a new bull market high. Achieve the 1177 Jan- Feb H&S obj. Short term bearish divergences have been a growing concern. Odds are increasing that the market is forming a near term top. Let’s see if we get downside follow through. Closes below the 1154 Feb CH low, and 1150 Jan peak would imply a ST top, for the 1135 Mar 9 L. Next is 1126 Mar 3 H, then MT support at 1116/1112.  Bigger picture, the recent new highs in the NYSE cumulative A-D line confirm the rally highs. Cyclical bull markets usually peak months after this indicator turns down. Next resistance rests at the 1189 Feb channel high, then macro resistance for 2010: 1200 July ‘08 low/break, 1229 Oct ‘07 61.8% retrace, and 1240 ‘08-’09 Head and Shoulders bottom obj. Latter is viewed as a ceiling.

·         US equity strategy comments – from JPMorgan’s Tom Lee - Still constructive, but developing short-term concerns - First, the % of stocks above their 50-day moving average is now 89%, putting this in the caution zone.  The other issue is that it seems analysts have upgraded stocks rapidly in the past 6 months and the FC mean rating (aggregate buys vs. sells) is at an 8-yr high.  We still see the S&P 500 reaching 1300 by year end but also see signs of potential short-term turbulence.  23 stock ideas: ME, AGO, CDNS, EP, AMR, RRC, KBH, LEN, PXD, TOL, AMZN, BEN, MWW, TWTC, CBG, BWA, EVVV, SKS, SFD, COL, CMA, ESS, CLF    

·         Asset flows – equities - Total equity fund flows (excluding ETFs) continued to be positive, with inflows of $15 mm, compared to $533 mm of inflows last week. Domestic equity funds had $29 mm of inflows compared to $389 mm of inflows in the prior week.  Worthington    

·         Asset flows – fixed income - HG funds had $1.2B of inflows vs. $1.1B last week based on AMG data reported last night. HY funds had $539mm of inflows vs. $597mm last week. Equity funds had very strong inflows of $6.0B, up from $2.8B last week and $1.7B the prior week. MM fund outflows were just $3B, after $120B of outflows the prior 3 weeks.  E Beinstein. 

·         Returns - Asset managers in 1Q are up 3.55% on average compared to the S&P 500 up 4.72%.  Worthington.   

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