Date: March 9, 2015

Canaries in the Major Indices Singing Loudly

With stocks scoring new highs lately, it’s a good time to pay a visit to the canaries in the coal mine and see if we have any dead ones. For newer readers, Canaries in the Coal Mine is a semi-regular piece when stocks are near fresh highs or lows to signal a potential major trend change or warning sign. This analysis is not good at identifying routine and regular corrections or intermediate-term rallies.
In this first piece, we are going to look at the major stock market indices with the Dow Jones Industrials being first. As you can see below, after a multi-month period of digestion with more than a few pundits calling for the end of the bull market, the Dow gathered itself and saw all-time highs this

Almost the exact same comments can be made regarding the S&P 500 which is also sitting at an all-time high. Hard to argue with that!

The S&P 400 mid cap index is below and like the previous ones, it sits at yet another all-time high. Do you smell a trend developing here???

Just like with the others, but even more impressive, the Russell 2000 small cap index is next and sitting at all-time highs. This is probably the biggest “stick in the eye” to the bears because they were hanging their hats on the fact that the small caps performed so horribly last year, which would portend problems for the rest of the market in 2015. That scenario, which I totally discounted in my 2015 Fearless Forecast, was not to be had and the bears will have to find fault somewhere else.

Finally, the NASDAQ 100 is below and while it is not YET at the all-time level last seen in March 2000 which I forecast it will in the 2015 Fearless Forecast, it is, nonetheless, at fresh highs 14 year highs and still a bullish sign.

The takeaway from this section is that all canaries are happily signing loudly from a long-term perspective. We can and should see pullbacks and corrections along the way, but those should lead to more all-time highs down the road.

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Paul Schatz, President, Heritage Capital