The Dow was up another 29 points on Friday and closed above 10,500, which is bullish behavior. The Dow Transports and Utilities, along with the Russell 2000 and the Nasdaq 100 all made yearly highs. The S&P is trailing due to weakness in the financial sector. Full Article
All three major indices set new yearly highs on Monday, which the financial media regards as particularly bullish. One reason is that the S&P 500 has been lagging the pack. With ‘confirmation’ from the S&P, some market technicians are breathing a sigh of relief. Hummmm.
Unfortunately, we do not concur with the rationale for the enthusiasm. As the market moves higher, we are getting more cautious, not more bullish. We have two technical resistance zones in mind, one is Dow 10,500 and the other is Dow 10,800. These levels operate like the orbits of electrons around an atomic nucleus. Electrons are stable at these orbit levels and don’t spend much time in transition. Markets act the same way. If the Dow can break through the 10,500 zone, we expect it to travel to 10,800 rather quickly. Time will tell.
We had some continuation of the selling on Friday, but on declining volume. The Dow was down 46 points and is testing support at the August high. As we noted on Friday, however, a slightly deeper pullback would be normal at this stage of the game (see chart below). We also wrote, “We would not get overly bearish at this point.”
After all, markets don’t move in a straight line, they inhale and exhale, they zig and they zag, they advance and then they back and fill to consolidate gains and test support. So far, that normal process appears to be underway. Full Article
This appears to be the start of Act II of the Obama Relief rally. That’s good news, as we all would appreciate the market looking across the valley of the shadow of death and anticipating better days six months from now. That’s what it is supposed to do. Full Article
The fat lady sang on Wednesday but the play turned from a tragedy on Thursday morning into a comedy by Thursday afternoon. Here’s what Don Worden of Telechart had to say. Don has been involved with the markets since the 1950s and was doing technical analysis back when it was done with a pencil, a ruler and a paper chart. He writes: Full Article
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