Bears Starting to Throw In the Towel

Over the past week or so, I have written about some price levels I wanted to see exceeded to turn the picture a little more bullish. Since then, all five major stock market indices have closed above those levels. After that I wrote about the “key” reversal last Friday that had some analysts calling for the end of the bull market. The market immediately rejected that rejection. Then the bears hung their hopes on the “magical” 50 day moving average. On Tuesday, every major index closed firmly above their average price of the last 50 days. The bears cried about the lack of volume. Stock market volume just surged.

I think the bears have started to throw in the towel. And that now makes me a tad nervous.

During Tuesday’s rally, banks closed lower and are reacting negatively to good earnings. High yield (junk) bonds, while rallying nicely, closed near their lows of the day on Tuesday. Stock market participation in the rally is decent, but from resounding and we still do not have a single day where 90% of the volume has been in advancing stocks. That’s not the type of action that leads to a strong and sustainable move higher. It’s what you sometimes see before a rally ends.

I guess what I am trying to say is that after not worrying too much about the short-term for a while, I am now growing more concerned. Before the emails come in, I still believe the bull market is intact and Dow 27,000 remains on tap. I am just not sure that stocks are going straight to new highs from here. Let’s see what the coming few days bring…

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Paul Schatz, President, Heritage Capital
Paul Schatz, President, Heritage Capital
If you have at least $250,000 of investable assets and would like to schedule a complimentary meeting, call, or video conference with me, please click on my calendar here email me at Paul@investfortomorrow.com or call the office directly at 203.389.3553.

Comments

  1. Marc J Mosqueda says:

    I live near Chicago and have been keeping an eye on the weather and what is going on currently with Mr. Trump. In my opinion, he is good for a trader like myself a life Democrat and living in Gar, Indiana all my life. He is also good for commodities along with this crazy weather we have been having. BBQ season is here and in m,y opinion and will be keeping an eye on lean hogs along with corn and soybeans that affect us worldwide. Natural gas trades should be looking good for a stalk. I am currently trading currency pairs in the spot forex market. I am stalking the Euro Dollar eur/usd, Swiss Franc usd/chf and watching the Dollar Index dx to gauge my Euro Dollar trades. I do not watch fox network at all sorry Paul (Big Smile) it takes away my focus and relies on real news. I must admit I only watch MSNBC for News Flashes along with Bloomberg TV. The news I do listen to are from real traders in Chicago or someone like yourself or Tiny. I never ever traded in a market with a man like president Trump and was too young to trade during the Kennedy and Nixon years. Nice blog post as always.

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  1. […] like clockwork when I wrote about the bears giving up which caused me to be concerned, stocks declined. However, given the elevated level of volatility a […]

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