S&P and Dow Record Highs
A three point gain in SPY for Battle Plan subscribers and the market is now overbought. What makes this so interesting is that there is very little fanfare around the fact that the S&P and Dow made record highs. Usually this is lead story material; this time it’s a blip. Such reaction is longer-term positive. Little euphoria means that the usual froth seen near highs is not here today and that this bull market has a way to go. As I stated last week, as long as the market remains above the 200 day ma, the path of least resistance is higher. Yesterday’s move proved this out again.
The market is overbought on a short-term basis. There may be a pause or a slight pullback but there’s and old traders saying that has proven more times than not; don’t short new index highs. Many years ago the head strategist at Merrill Lynch (a very smart man) referred to it as “putting one’s face in front of a speeding train”.