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All Clear, but with Caution July 12, 2013

Posted by Tom in Thoughts.
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On Tuesday of the week past the market solidly closed above our 3488 level, then gapped up on Thursday and Friday.  Quite a ride up, hope you were on it.  The chart below shows a longer term price channel (in purple) and we’re getting rather close to the upper reaches again (note green circle).  BTW, you can click on any graphic to enlarge them for easy viewing.

NASDAQ

So it is natural to think that the market is approaching an “over bought” condition; we’ve come a long way quickly and I’d expect a pause in here.  The (red) histogram chart above the price chart confirms that price break out as money did flow back into the market, but again, it is reaching a high point historically.

The Price Strength and Money Flow pie charts (below) confirm the power of this rally in the very broad S&P 1500 index stocks.  Participation is strong and wide.    

                                                                                           (Price Strength below)

Price Strength                                                                                             (Money Flow below)

Money Flow

 

All of this is positive, even with volume being average.  If you’re not on board yet, I’d wait to see what happens during the next week, as I would expect prices to ease down just a bit.

What I find interesting in this whole thing is the reaction to all of the “FED news” and almost panic about interest rates going up.  Yes Virgina, they will go up because they are artificially low.  The big question is “When”.   Bernanke’s answer is “Later”.  Now, where were we?  Oh yes, in an up trend.

Emerging Markets have been hit hard over the past 2 months (along with gold), but may (just may) be bottoming out.  I’d give them some time to build a base before I’d actively consider them though.  Be careful out there, pick your entry and be patient.  Have a good week.            ………….  Tom  …………..

price chart courtesy of MetaStock; pie charts by http://www.HighGrowthInvestor.com; used with permission.

 

 

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