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The Trend Up Continues September 8, 2012

Posted by Tom in Thoughts.
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This will be a brief comment since I’m on vacation and doing it via a remote computer.

A very interesting week to say the least.  Once again we see the power of the “Euro Effect” on the world markets.  For all of those Americans that think the rest of the world (and their economies) don’t make a difference to us; they saw clearly that they do matter.  The US is not going to do well without the major economies of the world being healthy.  (and vise-versa)  We’re in the 21st century and more interconnected than most citizens of the world realize.

Good news . . . . the market take off.  THE ECB announced the intention to sell Euro Bonds to finance the ever-increasing “bailout”.  One additional hurdle is ahead next week; that of the German High Court on just how much Germany can contribute to continuing efforts.  But the stage is set.  This will take time for recovery to be felt, just like in the US.

The markets reacted positively as sen below.

I am just alitte concerned about the price action on Friday.  The chart shows a narrow range bar (high and low prices close together) on rather high (for recent weeks) volume.  Telling me that as buyers poured into stocks they were met with sellers.  Prices on Friday did not move much.   A sign of caution.    items circled in green above

Telecom, Precious Metals (fears of inflation), Biotech, Internet and Banks are doing well.  Small Cap and Mid Cap as well as the tech heavy NASDAQ 100 indexes are strong.  Signs of a “risk on” trade?  I’m not convinced just yet since we are close to the top of the price channel and just regaining the lead from the previous price peak last Spring.  This is the time to follow the trend but NOT be blinded by it. 

Risk is highest at market tops, not market bottoms and we’re well off the last bottom.  Have a good week.     … Tom …

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