Friday, May 17, 2013

Another day, another record high

Forth week in the row on the upside and market, once again, claims record highs. This is one of the longest rally since the March 2009 bottom, 6 months old and no less than 300 points on SPX.

However, looking at the charts on all time frames it looks like market is getting overbought. Look on daily and weekly chart at DMI, they are all positive, of course, but notice their value, quite high I must say.

Also notice that SPX is almost 100 points above rising SMA 120 on 4 hours chart. I don't remember when was the last time I saw such a big difference between price and SMA 120.

So, I have reason to believe market may cool down a little bit. It doesn't mean we are going to see a drop, it means that the market may suffer a lateral consolidation rather than going straight up. This is my guess based on how charts are looking at the moment.

The rally we are seeing don't look like short squeezes to me, it looks more like new money is entering the market.

Gold got crashed this week and we should not be surprised since technically it's in a bear market, meaning rallies are short lived and fresh lows are expected. Metals and mining stocks (X, CLF, WLT) are also down this week but not as much as gold or silver. If you want to short gold you can try GDX instead of GLD.

All the best!


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