Thursday, April 22, 2010

The Amazing Levitating Market

This market is truly amazing. It refuses to correct even though most agree that it is overbought and due for a correction. The internals are not that great, but not that bad either. This makes it a dangerous market. It leads to a complacency that will likely catch many off guard. Even if it continues its upward trajectory, I think the prudent thing is to be taking profits on short term trades when possible, and not initiating new intermediate term trades until we see a pullback to the 50dema. The Wilshire 5000 looks as though it only needs one more push up to reach its upper channel line, which should be the terminus for the rally from 2/5/10.

There are reasons to believe that the rally might make another new high in May after the first pullback, but I think any test of the current high will be a (B) wave. We may see a repeat of last year's May/June correction.

Gold appears to be ready to move up in wave [c] of Y of (X). This will probably lead to some metal stocks breaking out. However, the move may not last more than another 8 to 10 days.

Oil is still holding up and oil service stocks are doing well. I expect oil to continue its move higher against general expectations.

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