STOCK MARKET WATCH -- Monday, 3 February 2014

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27. Record S&P 500 Momentum Unwinding as China Quashes Euphoria

http://www.bloomberg.com/news/2014-02-03/record-momentum-unwinding-in-s-p-500-as-china-quashes-euphoria.html

After U.S. stocks gained 30 percent last year and almost everything went up, measures of Standard & Poor’s 500 Index price momentum are slipping just as concern mounts that emerging markets will snuff out the rally.

Almost 160 companies in the benchmark gauge for American equities traded below their average level over the past 200 days last week, more than any time last year, when stocks posted the biggest rally since the technology bubble, according to data compiled by Bloomberg. A total of 86 stocks set one-year highs as the index hit a record Jan. 15. That’s down from an average of 112 when peaks were reached in the third quarter.

Weakness in the indicators watched by technical analysts is a sign the investor euphoria is waning after 460 companies in the S&P 500 climbed in 2013, according to Bank of America Corp. While slowing momentum has sometimes been bullish when valuations shrink, Thornburg Investment Management Inc.’s Jason Brady says investors should prepare for more months like January, when equities tumbled as manufacturing growth in China slowed.

“You have to have new reasons for prices to go up,” Brady, a money manager at Thornburg who helps oversee $95 billion, said in a Jan. 28 phone interview from Santa Fe, New Mexico. “Maybe there’s no longer these reasons.”