Thursday, May 5, 2011

Who Do You Believe?

IBD has called the market in correction based on yesterday's action, but the folks at Cabot say the market's uptrend is still intact despite the recent bought of selling.  I have to admit I was surprised by IBD's call since there has only been 4 distribution days on the NYSE.  It seemed they were basing their decision more on the action of leading stocks, which have definitely taken a beating the past few days, than the distribution count.  The general rule is 5 or more distribution days before a correction is called.

The SP500 really needs to close above 1340 (futures above 1337.50) today or we may see a much deeper pullback, but until the April 18 low of 1294.70 is breached, we will still have a series of higher highs and higher lows.

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