The S&P 500 started last week at new all time highs, and despite the prevailing skepticism, it continued to make further new highs as the week progressed. Even though the NYSE Composite has not yet made new highs, the daily NYSE Advance/Decline broke out to a new high on February 3 and convinced me the next day that stocks did have enough juice to breakout to the upside.
Despite the many positive technical readings for the stock market, there are no signs yet that prices are ready to accelerate to the upside. Stocks had been ready for a pullback last week and the selling early Friday, if it continues into the close, could be the start of a welcome pullback. Stronger signals could develop by early March and I continue to think that stocks have the ability to melt up in 2015.
After January's lower close, the strong action so far in February has not been surprising. The January 2014 S&P decline of 3.43% was followed by a 4.31% gain in February. As of the close on Thursday, February 19, the S&P 500 was up 5.1% for the month. If the S&P can maintain these gains through the end of the month, it would be the best February since 1998 when the S&P was up 7.04%.
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