Weekend Review - Can we go higher?

The Dow continues to close at record-breaking highs, above 13,000, while the S&P 500 and NASDAQ Composite are making new 6 years highs. Can we go higher? Our canaries - the big banks ($BKX), broker/dealers ($XBD), and housing ($HGX), continue to lag, though the brokers are looking better lately and are testing their 2007 highs set in January.

The QQQQ and IWM have bearish megaphone patterns, that show up very well on the weekly charts. Also, the CCI on the QQQQ is in a very overbought condition, above the +200 line. The same is true for DIA and SPY (not shown). It is rare for the weekly CCI to be so overbought. On the dailies, the QQQQ has a weakening Chaikin Osc, and we will be watching that trend line on the CCI. The daily IWM is looking stronger.

News: our Forum is open: http://glorytrades.com/forum/

Weekend Review - Blast Off!!

The U.S. markets are blasting higher, with INDU making new all time highs this past week, and the SPX close to its own all time record high reached in 2000. BKX and XBD -- two of our "canaries" -- were also very strong last week, due to some good earnings reports, and the prospect for Congressional action to "bail out" lenders/borrowers with respect to problem housing loans. GSEs are also suddenly interested in buying subprime housing loans. http://www.washingtonpost.com/wp-dyn/content/article/2007/04/18/AR2007041802499.html?hpid=sec-business This news also helped our third "canary," the housing index, push higher last week. So much good news -- while the U.S. dollar hit a 26 year low against the British pound. The late February/March sell off earlier this year is a distant memory in the minds of "whoever" is buying here.

After retesting moving average support, noted in last wekend's review, the major U.S. indices switched to buy signals. This past week, our Aggressive Method remained on those buy signals for most of the U.S. indices, except one - the one we like to trade. It looks like we may be whipped out of a short in IWM. Details must be left for our members.

Oil (USO) broke down a bit last week and our Aggressive Method triggered a sell signal. Although USO had a good up day Friday, it is still below resistance of the 50 day MA.

Weekend Review

Gold (GLD) continues up -- no reason to get out of that long.

Oil (USO) gave us another long entry this week -- this was a "with trend" trade, for those who are following along.

On IWM and QQQQ -- traders following our Aggressive Mechanical Method (based on signals from Rodo) took profits on their longs this week and reversed to short. We warned clients, however, of the possibility that the U.S. equity indices would merely go down to touch moving average support and bounce back up -- which is exactly what they did.

All of the major U.S. equity indices we follow have filled their 2/27 gaps. NYA (the New York Stock Exchange index) has gone up to make a new all-time high. The economic problems that currently confront the United States are well known, and discussed thoroughly elsewhere. There is every reason for our stock markets to fall, except one: "There is too much cheap money floating around." With speculative money no longer going into housing, it needs to find a home somewhere, and it seems stocks are the place to be. Will the equity markets be the next bubble? Our "canary" sectors - banks, brokers, and housing - continue to lag the broad-based indices, with the housing index ($HGX) and the bank index ($BKX) still below their 200 day moving average. With the "canaries" so weak, we cannot be enthusiastic about the prospects for our markets, but we are not in the business of making predictions. The "bears" who warned about the Nasdaq bubble beginning in 1997 or so, were eventually proven correct, but they missed a great party !

Higher and Higher??

The major indices continue to claw their way up, and the going is slow. We are still long IWM and QQQQ. It does look like the Qs filled their gap from 2/27, as did IWM. The Qs came close to giving us a confirmed sell signal today, but it was a false alarm. Still, bearish divergences are showing up in the charts, most significantly on the chaikin osc.