Monday, November 16, 2009

Stocks Continue To Make New Highs

Stocks moved higher today with the Dow, S&P and NASDAQ all making new highs for the year. In the above chart of the Dow Jones Industrials you'll notice that the previous rallies were 665 and 689 points. Now we are seeing a rally of more than 700 points. The previous two rallies lasted exactly 13 days. The current rally is in its 10th day.

I still feel that the market is vulnerable to a sell off based on the fact that many key groups are not breaking high with the market. I came across a very interesting article that does a great job of expressing my exact view on the stock market. Here's the link:
"Stocks Are Up - But For Some Key Sectors The Bear Market Has Already Begun"


ben said...

The problem is: too many people
are looking at the same charts and
thinking the same way. When the
shorts are given up trying, the
market will then begin to tank.
When? It is anyone's guess.

Kevin said...

That may be true but that doesn't mean I am going to buy this breakout to new highs. Too many red flags are waving at me to stay away from the long side.

getyourselfconnected said...

That collapsing volume on the latest ride up does not bode well. At least that used to be how things worked.

Kevin said...

I agree about the volume. I was going to write about that but I decided not to. During the last 2 weeks of october the market sold off on good volume and is now rallying on lighter volume. That should be bearish.

par88 said...

I don't think these Dow highs are being confirmed by the Dow transports. So according to Dow theory, the top is probably near.

Kevin said...

Hi par88,

I agree, I'm just waiting for the dow to close below the trendline that I drew on the chart, then I'll short the russell 2000

RacerX said...

There's so many reasons to be bearish on the market, but when you relate it with the USD devaluing it makes more sense. I believe that's what the Bears are forgetting.

RacerX said...

Here's an article and chart from Phil's Stock World that illustrates what I'm talking about. (I'm not affiliated with PSW, just illustrating the S&P in USD vs gold)

Anonymous said...

It was very interesting for me to read this article. Thanx for it. I like such topics and everything that is connected to them. I would like to read a bit more on that blog soon.

ace said...

Light volume on the indexes has indeed been troubling. Furthermore, I keep an eye on leading stocks and, although there have been a decent number of record highs lately, many of the individual stocks making new all-time highs have mediocre volume too.

A while back I read a quote (maybe on the Kirk Report?) that said "A trend, once established, lasts longer than most people expect" ... it seems to be holding true lately.


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