EB Watch List Update Report

MARKET NOTE: Dear Members: The bears are doing their best to stop the equity freight train and are having some - but not much - success with all of the major indexes lower. The recent pattern of tech stocks being the weakest and blue chips being the strongest continues. But once again the bit of selling we are seeing hasn't done much to relieve the overbought conditions, particularly in the Dow. I did note in yesterday's Market Update that I could see the NASDAQ testing 5800 before bouncing which is the exact level it hit today. Some traders used that near term level of price support to enter new positions, hoping the move higher will quickly resume. The VIX is higher by over 1.5% today, off session highs, as it moves back above both its 20 and 50 day moving averages. As important; the gap between the 20 and 50 day moving averages continues to narrow and a cross of the 20 back above the 50 day could take the VIX even higher. That in turn could spook equity investors who have enjoyed non-stop gains for over three months now. Bond yields continue to fall with the ten year note now at 2.33%. This is more than 25 basis points below the December 2016 high and sends a signal that investors are moving to safety and that the Fed may have to hold off on any further rate increases in the very near term. I'm going to keep a close eye on the Dow since it has taken on a leadership position of late and it's been like pulling teeth to get it lower. On the chart it looks like it could move back to the 20,500 level and even then would remain above all technical levels. Also, a move to that level could help relieve the very overbought stochastics and RSI. So no big deal for a pullback like that which in fact would be healthy for the market. In looking at the S&P it got as high as 2368 yesterday so that is now resistance. To the downside I still see a high likelihood at some point of a pullback to the 2320-2330 level. So right now the reward to risk to me remains to the downside even though it would not be shocking to see the bulls attempt another move higher which would only result in even greater overbought conditions. KEY EARNINGS REPORTS Companies reporting earnings today (February 24) include: BAS.DE, BCC, FL, JCP and TDS Companies reporting earnings Monday (February 27) include: AES, ALB, EOG, HTZ, PCLN and BID ADDITIONS TO WATCH LISTS: I have held off on issuing any new trading alerts for the past few weeks simply because important technical indicators that have proven over the years to be quite reliable continue to show overbought conditions. Even though the market has hung in stubbornly it does not mean we could not see a sudden and swift correction. In fact I had to go back to 2007 to see the Dow as overbought as it is now; nothing close to it since then. This doesn't mean a severe pullback is in the cards but to me it sends up a big red flag and the last thing I want to do is put out alerts just when the market could be setting up for a correction. This might feel frustrating to some but to me its more a matter of being disciplined so I am going to continue to err on the side of caution for the time being. BRIEF COMMENTS ON SELECT WATCH LIST STOCKS: SHORTS: None at this time LONGS: Large Cap Watch List None at this time Mid Cap Watch List None at this time Small Cap Watch List None of this time DELETIONS FROM OUR WATCH LISTS: None at this time. I want to wish everyone a restful weekend and I will be back Monday morning with my EB Watch List Update Report. At your service, John Hopkins EarningsBeats