bb,
Yes there are many things pointing to higher prices.
Its never good to argue with what the market is telling you. During the past seven weeks there were plenty of reasons to be bearish. Advance decline line falling, rising VIX, rising interest rates, collapsing RUT. And unfortunately as a technician the chart patterns can be very difficult to read as the trend is developing. The trend I am referring to is the one that has developed over the past seven weeks on the DOW, after it failed to hold the triple top formation. Initially, that pattern is not apparent because of the limited amount of data that you have to work with. However, with each trading day another piece of the puzzle falls into place. As of last week, with the intermediate term trend on the DOW already negative, and the long term trend in jeopardy. You get to that fork in the road where downtrend and uptrend converge on one another and only one can win out. So despite the obvious weakness in the RUT and general markets. I feel its the observation of prices that should ultimately make up your long term analysis of trend. A good example of this would be to look at the charts for INTC, DELL, CSCO. Stocks that have been under pretty good selling pressure this month. Its very easy to get caught up in their downdraft as well as the weakness in the overall markets and turn increasingly more bearish. However, with the bulls regaining the intermediate term at the end of last week. A weekly reversal on the VIX. Falling rates, rising dollar, utilities climbing, transports that held up much better than the small stocks. And despite the weakness of so many market leaders this month, a close look at their monthly charts will reveal lows that are still higher than the month of January. So with today's move we have the beginning of a breakout on many of the indexes and individual companies. And with prices closing at the highs of the day, I believe there is further upside in store. However, my belief in the importance of closing weekly prices is no different for a rising market or falling. Any rally here that fails to add onto its gains will surely be suspect.
I do believe this rally is real. Because this new trend is also just beginning a close look at the charts of MRK, CMB, and WCOM. Three companies in different segments of the market that are all breaking into new highs on today's trading. And FDX in the trannies about a day away from doing the same thing. Companies like IBM, GM, T and JNJ to name a few just beginning to move. You have to take this move seriously. I will be watching like many of you how this plays out over the next couple of days.
SO |
