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Concerned but Climbing March 16, 2012

Posted by Tom in Thoughts.

O.K., I’m beginning to sound like a worry wort.  This market continues to climb at an (almost) alarming rate . . not sustainable over the long run, but it keeps on going.  The chart below of the broad NASDAQ Composite Index shows what I mean.

Chart courtesy of MetaStock / Equis International; used with permission.

We’ve broken out well above previous Resistance levels and now it becomes potential Support If/When this market really starts to correct.  The price trend is sharply Up but the Volume is Down . . . significant new Buyers are not coming into this market and Sellers really don’t want to Sell.  I believe this could set the stage for an imbalance (i.e. price and volume are not in harmony), the question is when.  (I don’t know when, but nobody else does either.)  So until “the time” comes, I must stay invested.  I’m staying with strong relative (strength to the market) securities that are in leading sectors, that have shown the ability to grow (earnings) in this economy.  Here are some ideas about strong sectors:

We’ll look at the number of stocks in the broad S&P 1500 Index that are under Accumulation (i.e. various degrees of buying pressure) in the near term.  (remember, “green is good, red is not so good”)

Next a look at Price Strength in the S&P 1500 stocks:

top 3 charts courtesy of HighGrowthStock.com, copyright 2010-12, used with permission.

Prices Up, Volume Down (caution ahead) and (so far) stocks are under Accumulation.  The mission now is to stay the course until it changes and it will some day.  Have a good week and feel free to Leave Comments via the link at the top of this post.  ……..  Tom  ……….


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