There seems to be no stopping this rally. Nearly every day the market advances. On many days the market tries to pull back, but by the end of the day the bulls come back with more buying and the market closes higher. It seems that there is a buying panic in place. Of course volume has been missing from this rally. Nobody seems to notice. Economic numbers, especially employment prospects, seem about as dismal as they’ve ever been. Either nobody notices, or nobody cares. The left wing congress is about to pull a gigantic sleight of hand that will take over a big chunk of the economy. Well, that looks like the fundamental change the majority of us voted for. Hope and change. I’m really hoping for change now. At least the public is awake this time. Perhaps the market is still focusing on change this fall when hopefully much of that cesspool of a congress will be voted out.
I haven’t updated this blog in a while as there has been little change in the market outlook. It is getting to the point when this thing could collapse without a timely warning from technical analysis. The only warning I see so far is lack of volume, but that isn’t of much help in trying to time an end to what still looks like a counter-trend rally, although a very large rally. A look at the very long term monthly chart of the cash S&P index shows a massive double top still in place, with the current rally being about a 50% retracement of the previous drop. Some stocks have had very impressive rallies, such as Ford which has had a run from about $1 a share to over $14 as I write this. Of course $14 is still far below where that stock had been a few years ago. Many buy and hold investors are a long way from breakeven despite this huge rally. The same can be said for many large, widely owned stocks. The public doesn’t seem to be piling on this trend yet as evidenced by the low mutual fund cash position and inflows. Bulls would say this is healthy and from a contrarian point of view would suggest more room to move on the upside. Not sure what bears would say. They seem to be missing at the moment. But they will return when least expected.