Good Evening,
I told you when I had something important to say that I would say it. In this case– re-state it. Yesterday I mentioned again that this market had a lack of conviction, but that it was going up and that we had no choice but to embrace the pricing action. Earlier, I wrote that though the market is going up, traders were looking for the smallest excuse to hit the eject button. I used the example of so many people getting trampled trying to get to the exits during the Who concert so many years ago. My point in all this is simple… stock valuations are currently 25X. The last times they were that high were in 2007, 2001, and most notable in 1926, just before major corrections that lasted up to five years. I also have said repeatedly that I thought the next correction would be tied to the end of the FED stimulus, most recently I mentioned the end of low interest rates. My mistake, and that of many experienced traders, was to try to anticipate the correction to come. I was punished three times this year for doing so. Some traders have been repeatedly punished for the past five years. I, like many traders, have adopted the strategy of holding my nose and embracing the pricing action right up to the end. That is to say, right up to the correction. I am not in the business of prognostication, I will run my pure system from here on out. I will watch the charts and react to what they tell me. With God’s help, I will have enough profit to get out and weather the storm when it comes. I know I’ve been quoting a lot of RevShark lately, but I must do it again as He Nailed It Today. Make sure you read and understand what we are saying!!!!
RevShark James DePorre (SharkInvesting.com)“Once again this morning there is a headline “Most Hated Bull Market in History”. That has been a constant them for a while but at the same time the bears continually point out the high level of bullish sentiment and the lack of volatility. The contrarian bears are convinced that the mood is so complacent and unworried that there is little buying power left and that a major reversal is about to occur.So which is it? Is the market hated or loved? Are we climbing a wall of worry and disgust or are we ready to collapse due to extreme optimism?Like so many other things in this market the ideas and concepts that worked prior to the Great Recession no longer apply. You can’t just measure sentiment, look at polls and draw any hard conclusions. The biggest mistake the pundits make these days is that they do not measure the degree of conviction. These days when you ask an investor if he is bullish the answer is likely to be ‘yes, but …’It is that equivocation that is fooling the bears. Sure folks are bullish. Stocks are going up so why shouldn’t they be? However many, if not most, are convinced that we are heading for a nasty fall and they are ready to exit at the first sign of trouble. They are in this market and are bullish but their conviction is razor thin.It is widely believed by many market players that the Fed will be the catalyst for a market tumble once it actually begins to raise interest rates. Janet Yellen has been extremely careful in sending the message that the Fed isn’t going to be engage in any tightening for a while to come. That is all investors need to keep them in this market and that is why we keep on running higher.The bull market is hated because so many market players don’t trust or believe in it. The see too many negatives and are convinced they will eventually have a major impact. On the other hand the market is trending up, the media is celebrating all-time highs and if you are a bear you are missing out. There is little choice but to maintain a bullish posture.At some point the conflicting emotions are going to produce some market drama but the bear’s big mistake it thinking that it is going to occur at any moment and that they can time it. Until the Central Bankers make a clear move to raise rates and the market sees it as the start of a trend it is unlikely that the market is going to see much downside.The mixed up emotions are market players make for some choppy trading but this week with the long weekend in front of us things are going to slow and become even more unstable. The good news is that while the indices are doing little there is generally good underlying action. Momentum stocks are acting well and there is some speculative small cap action. There is no rush to the exits and there is good underlying support and dip buying action. It is slow but positive.Today is the first day of a new month which has a positive bias as new money is deposited in retirement plans and mutual funds. That money is typically put to work immediately which is why we have consistent positive action to start off the quarter. The action is going to slow fast over the next couple days but the bias is still quite positive.”
That is the strategy that you must have for success in this market……
It’s July, and investors love the heat.
| 07/01/14 | |||||
| Fund | G Fund | F Fund | C Fund | S Fund | I Fund |
| Price | 14.4549 | 16.3851 | 25.7647 | 36.0806 | 27.0497 |
| $ Change | 0.0009 | -0.0440 | 0.1760 | 0.3192 | 0.1911 |
| % Change day | +0.01% | -0.27% | +0.69% | +0.89% | +0.71% |
| % Change week | +0.02% | -0.12% | +0.66% | +1.31% | +1.01% |
| % Change month | +0.01% | -0.27% | +0.69% | +0.89% | +0.71% |
| % Change year | +1.18% | +4.09% | +7.91% | +7.16% | +5.81% |
| L INC | L 2020 | L 2030 | L 2040 | L 2050 | |
| Price | 17.2536 | 22.7805 | 24.7269 | 26.3277 | 14.985 |
| $ Change | 0.0230 | 0.0834 | 0.1166 | 0.1443 | 0.0937 |
| % Change day | +0.13% | +0.37% | +0.47% | +0.55% | +0.63% |
| % Change week | +0.18% | +0.46% | +0.59% | +0.68% | +0.78% |
| % Change month | +0.13% | +0.37% | +0.47% | +0.55% | +0.63% |
| % Change year | +2.60% | +4.52% | +5.40% | +6.01% | +6.55% |
“The PMO was whipsawed with today’s breakout. Yesterday was a PMO SELL signal as it dipped below its EMA and today it bounced up just enough to climb back above its EMA to generate a new PMO BUY signal. The PMO is very overbought but it hasn’t quite hit extremes so this could be the start of a new leg up for price. The breakout from the bearish rising wedge pattern is very bullish. Besides being a clean breakout above resistance, it is an unexpected bullish execution of a bearish pattern. “
Conclusion:“The market hit all-time highs once again despite the need for a pullback or correction. Short-term indicators reflect a market that has internal strength, enough to evidently curb a correction. The market needs to correct, but seems oblivious to that fact. All indicators can technically support higher prices for a bit longer. It may be time to abandon the bearish ascending wedge, but I’ll hold off until we see a decisive breakout.”
