Another Good Week

Even though we had the sell off on Friday, the market put in another good week.  In fact, this is the 3rd positive week in a row.  It’s been quite a while since we’ve seen that.  Not a big shock that sellers came in Friday and took some profits.  There were a few times in the last couple of hours the bulls tried to make a stand and push it higher, the ultimately the bears won out.  I’m describing this fierce battle because that’s exactly what it’s been lately.  Late afternoon trading has been a battle.  Up 200, down 100, up 100. Those are the kind of moves we’ve been seeing late in the day.  The bulls have won most of those battles as of late but this is the time where the bears can take charge.  They might for a brief period but I still believe we’re going higher.  There are so many people doubting this rally.  I know that’s counter intuitive but doubters are what we need all the way up.  I’ve said it before.  

Today’s sell off wasn’t necessarily just profit taking.  The supply demand picture wasn’t real pretty today.  However, the volume on the S&P 500 SPDRS (SPY) was very low.  So, naturally, the bulls are saying there was no conviction by the sellers.  However, the bears have a few things going for them.  First, any way you slice it, we’re overbought.  Too many stocks are trading above their 40 & 50-day moving averages.  That simply means too many stocks are all going the same direction.  When that happens, you generally get a pause.  In addition, we’ve seen great demand during this rally but we still haven’t seen the supply of stocks going down.  There are still investors selling into rallies.  Mutual fund outflows are up and short interest is up.  So, there are definitely some pessimistic people out there.  Again, that may slowdown the rally but if the rally continues those people will come back in.  They always do.  

The market shrugged off some bad economic data this week pretty well as I think investors are becoming numb to all that bad data. We’ll soon be getting a lot of earnings reports from companies.  Could those be better than expected?  I doubt it.  But, again, we don’t know how investors will react to all that bad news.  We’ll cross that bridge when we get there.  Don’t let a few bad days scare you out of this market. It’s been a powerful rally that looks to have some legs.  As always, if I see something new developing, I’ll report it.  

Have a great weekend and enjoy the profits.

This post published at www.karleggerss.com

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