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It Keeps On Chugging Along November 23, 2013

Posted by Tom in Thoughts.
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We should be very Thankful that we’ve had a very bullish market this year and it just keeps chugging along.  All of the markets dips have been bought; whether you want to credit cheap money or whatever, they all have been bought.  The question is “How Long Can This Go On?”, the answer is: “Until It Ends!”.  OK, that’s a smart Alec remark, but if you stop and think about it, it’s spot on.

The market will continue to go up until either everyone has bought in (no new money coming in) or folks get concerned and start to take money out.  Since there appears to be enough money out of the market right now, the likely scenario is folks getting nervous and selling out of it.  What drives that is the feeling that it can’t go much higher or bad economic news that drives folks to the exits.  Oh yes, a geo-political event would do it to.

We’ve seen reactions to the ending of the FED purchase of mortgage bonds + giving banks ultra low-interest rates (that’s a deal . . for them), so there is concern and nervousness out there.  But, are people selling?  Let’s look at the charts.

NASDAQ

On a macro scale, no signs of selling, since we remain in the steady up trend channel (purple) that started a year ago.  On a shorter time scale we may (just may) be looking for a correction down to the 3900 level or lower (3855 to 3820).  The reason is we’re making new highs on modestly lower volume, but in the context of being at the upper channel (i.e. over bought).  That doesn’t mean it “has to” go down, but it is a yellow flag.  Perhaps not the best place to buy new things.  (You’ll also note a steady lowering of the Volume moving average at the low-end of the chart).  Caused by the upcoming holiday?  Perhaps.

Price Strength

The chart above is the Price Strength of all stocks in the S&P 1500.  Most are well above their 20 day moving average (i.e. “strong”).  Let’s look at what sectors are leading the rally here:

Top 20 Sectors

These are the top 20 sectors out of 68 major sectors.  It gives you a handle on where the price action is currently.

That’s ’bout all for now.  The market continues, but I’m more neutral than Bullish in the near term.  Long term appears to be intact for now.  Have a Happy Thanksgiving.          ………….  Tom  ………….

charts by MetaStock & www.HighGrowthStock.com; used with permission.

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