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Roll’in . . Roll’in . . . Roll’in January 12, 2018

Posted by Tom in Thoughts.
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Jan 12, 2018 – This market just keeps “Roll’in (Down The River”; pardon to CCR).  But, this too will end.  Why am I so dog gone concerned?  Here’s a chart of longest periods without at least a 5% correction.  We’re waaay up there as the third longest period.

OK, that doesn’t “prove” anything but it does show that this move, for this long, IS unusual.  And that is one of the big reasons why I keep a close eye for a possible correction.  Maybe not a bear market, but at least a meaningful correction.  With extra “income” coming to corporations in the form for lower taxes, this market is in love with stocks.  And that could continue for a while.

Is this market over bought and over optimistic?  The price chart below shows the number of stocks in the S&P 1500 index that have strong, neutral or weak near term price action.

What I think is more typical “healthy” is an even split between strong, neutral and weak.  That shows balance and not euphoria.  Waaay to much “green” up there for my liking of a stable market.  Next are the number of stocks in Accumulation (buying), Neutral and Distribution (selling).

The same thing goes here though not quite the unbalance as was in the price strength.  In short, the market is getting ahead of itself and pricing in all of that good news.  We’re in the earnings reporting season and all eyes (ears) will be on forward guidance.  Expectations and fear drive a market and right now they are excepting a lot of good news.

For now I have moved the initial support level up to 7111 on the NASDAQ Composite Index.  All primary indicators are positive / Bullish but the price is above the upper channel line; again, over bought.

This can go on for quite awhile, so I remain invested and in this market.  Strength is in the Oil and Emerging Market sectors, followed by Industrials and Basic Materials.  Take Care and have a good week.        …………….. Tom  …………..

Price chart by MetaStock; pie chart & table by http://www.HighGrowthStock.com. Used with permission.


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