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The March Upward Continues February 2, 2013

Posted by Tom in Thoughts.
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This will be a very brief posting as much of what I would say is included in my monthly newsletter (which is located on the tab just above; click on the letter to enlarge it).

For January the S&P 500 was up 5.04%, that’s an annualized rate of 80.47%.  Needless to say (but I will do so as a reminder) that is a very high rate of return, very rare in its appearance.  Don’t get me wrong, I’m still very much invested and doing well by this rally, but now is the time for increased vigilance.

In the last 3 postings I’ve talked about warning signs of the market being extended and “over bought”.  My feelings remain the same.  But, we won’t act on just feelings alone.  We will wait for the market to decide and tell us by its actions IF this trend will continue or change.  Right now things look pretty good for a continuation even after a modest correction downward or a pause.  In the newsletter I note some important support levels to monitor.  These should be watched, especially if the market actually Closes below these support levels.  Internals are weak, because of the recent excessive moves and “only price pays” so watch the price.

I note that until the last few days, Small Cap stocks (as shown by the Russell 2000 Index) have advanced more than Larger Cap stocks (i.e. S&P 500 Index).  That usually indicates a “risk on” approach by major investors.  The last few days has shown a slight change to that.  That is the Russell 2000 has advanced less than the S&P.  No red flag, but an item to note.  For the time being let’s be concerned but not worried.  Besides, worrying doesn’t help, only accurate observations and actions.

Have a good week.    ………..  Tom  …………

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