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Markets with a Minor Pause, Keep Moving March 31, 2012

Posted by Tom in Thoughts.

This market just keeps moving higher and many things support that.  It will be interesting to see how the 2nd Quarter starts off since many folks are now on board this train.  I did a little research on this . . roughly how long does a strong move last in recent history.  Well . . . there are no “rules” for this, but a rough eye-ball scan figures it to be about 5-6 months of a strong steady up move without a significant correction.  We’re just about in that time frame.

“Sell in May and Go Away”?  The long-term study shows that not really to be factual, tho the strongest period of the year is from the early Fall through late Winter (typically).  Blindly selling in May is not necessarily a good idea; following the trend always is.

chart courtesy of MetaStock; used with permission.

This chart of the NASDAQ Composite Index shows my version of a trading channel (with some flexibility of touch points).  Pretty impressive run.  The histogram above the price chart shows price momentum; it’s waning just a bit.  Could be an indicator of a short term pause or worse yet, a correction.  We’re ’bout due for one, so keep an eye open.  It could be a nice opportunity to buy at lower prices though.  Maybe a major news item will do it.  Keep an eye on the 3044 level, could be a tip off of things to come, but always look at volume too.

Current Top Sectors are shown below; generally a good place to be right now.

table courtesy of www.HighGrowthStock.com; used with permission, copyright 2010-12

I’ve just spent hours working on my monthly client newsletter (see it under the ‘newsletter’ tab above), so I’m pretty “written out” for now.  I’m not a writer, I’m a technical analyst, so writing is not my forte (yes, I know you can tell).  With that I’ll sign off untill next week.  Stay focused, there is opportunity out there.    …. Tom ….


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