FEAR IS GOOD

Usually too much fear means that the investors are in risk-on mood and after a while the market needs to turn into rally mood. Friday and the whole last week the market was choppy, investors are concerned about the major global conflicts like Iraq, Ukraine and Gaza.

Therefore, the negative sentiment of retail clients is pretty pessimistic and US equity funds endured 16,4$ billion in outflow last week. That is the biggest exodus of funds since 5th of February. I just note here the best rally occurred this year in February.

Finally Friday all major indices broke the cold streak of decline and turned green. The volume was thin due to the holiday season, but the day was pretty good for stocks. Dow posted its biggest one-day point and percentage gains since March 4.

• S&P 500 +1.2%, for the week + 0.3%. 
• DJIA +1.1%,, for the week +0.4% 
• Nasdaq +0.8%, +0.4% gain for the week 

The small-cap Russell 2000 outperformed the other benchmarks and is firmly in the green for the week though +0.7%, bucking the negative trend. That’s certainly a change of pace for the Russell, which is still underperforming the other indexes for 2014 YTD.

Technically the Dow Jones made the break Friday so the way is opened to north. Our next resistance is at 16,880.

The BFM Assets Team.