His call for this week (but read the full story) in very short:
Well it’s a record, at least according to our notes of more than 40 years, as the current “buying stampede” has eclipsed the previous record stampede of 41 sessions. Indeed, today is session 45 in the upside skein without so much as anything more than a one- to three-session pause/correction since the stampede began on March 9th; and, we were bullish at that time. The straight up rally has lifted the senior index (DJIA/8574.65) some 33%, and to within 4.5% of its 200-day moving average (DMA) at 8575, which should act as overhead resistance. Clearly, the markets are currently overbought with 91% of the S&P 500 components above their respective 50-DMAs, while 44% are above their 200-DMAs for the highest 200-DMA overbought reading since August 2008 (we were cautious). Moreover, as the astute Dines Letter observes, “April has been a month with a pivotal reversal of the March trend 67% of the time since 1963; and, at least a semi-important TOP has been reached in virtually every April or May since then.” Consequently, while we don’t think the old stock market “saw” of “sell in May and go away” is going to play in 2009, we do believe the trick from here is to harvest trading profits and hedge some of your investment positions for a downside correction. That said, we are buyers of select thematic investment positions, preferably ones with a dividend yield, on weakness.Consider as a probability!
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