Stock Market Behavior Bullish
By Laif Meidell, CMT, President of American Wealth Management, and Portfolio Manager of the AdvisorShares Meidell Tactical Advantage ETF (NYSE Arca: MATH) and the AdvisorShares Market Adaptive Unconstrained Income ETF (NASDAQ: MAUI)
Someone once said that if you want to better understand the current attitude of the stock market watch how it behaves when stocks are falling. Applying this idea to today’s market behavior, over the past few weeks stocks have been extremely resilient, with minor declines met with renewed buying enthusiasm. Although it won’t last fever, at the moment the behavior of the stock market is very bullish.
For the second day in a row, U.S. stocks traded in a narrow range on Wednesday as investors focused on home sales, oil prices and Thursday’s meeting of the European Central Bank. Though all the major market averages finished the day in the green, most were little changed with the Standard and Poor’s 500 gaining 0.08 percent and the Nasdaq Composite higher by 0.16 percent.
On Wednesday we learned that existing home sales rose more than expected in March, gaining 5.1 percent to an annualized rate 5.33 million homes, however the improvement was insufficient to reverse the 7.3 percent decline in February. For the quarter, existing home sales rose a notable 4.8 percent.
Oil prices were off to the races once again after news from the EIA petroleum status report showed that oil inventories rose 2.1 million barrels over the past week to 538.6 million.
Though that statistic alone is bearish for oil prices, investors decided instead to focus on the 0.1 million barrel decline in gasoline inventories, while at the same time gasoline production rose for the week at an average rate of 9.7 million barrels a day. An indication that consumers are using gasoline at a faster rate than it’s being produced, giving investors hope that oil inventory levels will eventually fall.
For the week, the top performing countries across the globe were led by Greece with the MSCI All Greece Select 25/50 index up 8.08 percent over the past five trading days followed by the MSCI All Argentina 25/50 index rising 5.69 percent over the same period.