When the market looks too good...
All our targets hit now, lets look at the star of the show:
The Nasdaq NYA Composite index is the real star for 2005 – clearly leading over the Nasdaq equivalent and even the more diversified S&P 500 index. All the right ingredients were in place and so far being confirmed for a “running triangle” – a market so strong that it shoots out of the rising wedge and keeps on running:
- New highs are expanding dramatically
- Market internals including advancers, decliners and a/d volume all pointing in the right direction
- Price consolidated for several days at 2005 highs and surged forward
—All well and good. And when all is well and good, there is no reason for stocks to pull back much, so our next step of course is to move up profit taking stops, and trim weak performers outright.
Some profit taking into the close will not be a surprise nor a big concern. And, geopolitical events over the weekend notwithstanding, come Monday a gap up would also be in character as well.
Tests of the tops and bottoms of major ranges are frequently long, drawn out, and arduous affairs as players battle their way to the top, and then once there, battle to hold on to it and head higher. Throughout the entire process we must stand ready for the unexpected – a complete reversal.
05.03.04 15:37 #