Listen To This

Random Thoughts

The Ps probed all-time highs and then came back in. They still managed to hold on to over ½% of their gains. Some see this as the “glass half empty” since they did give up some ground. I see it as “glass half full” because they closed just shy of all-time highs.

The Quack also tailed off its best levels but did gain nearly .7%–enough to have it closing at all-time highs.

Speaking of all-time highs, the Rusty almost made it to all-time highs. For the day, it gained nearly 3/4%. It really has been the comeback kid. This action in this broad based index suggests that the rally has been broad based (duh)—said alternatively, the market has had good breadth.

Shares outside the US (EFA) closed at multi-year highs. I don’t see this as a signal in and of itself, but more as a positive piece of the puzzle.

Overall, the sector action has been improving. Some such as the Semis, Software, Drugs—especially Biotech, Defense, and other Technology are banging out new highs.

Gold and Silver the metals made new highs while the stocks lagged a bit. Again, I still think the mother-of-all bottoms remains in place here—maybe I’m just a talking my-so-far-so-good positions.

I still like Uranium in the metals too. It got a bit of a bid yesterday.

All isn’t great in the world though. As you would imagine, there are some areas that still have the high level “V” shaped look to them. It will be important for these areas such as Chemicals to make new highs and stay there.

Again, things have been improving. I’m just not a big fan of buying into an overbought environment. It creates a darned if you do and darned if you don’t environment. If you buy it, the market corrects. If you short it, overbought becomes even more overbought.

Here’s the good news, I’m not seeing a whole lot of meaningful setups anyway. The rally from recent lows has created too many days in the pullback on the short side. And, since the market is hitting new highs aren’t many pullbacks.

So, what do we do? Listen to the database. Right now it is saying to stay mostly out of the market while things shake out. As I preach, there’s no need to be a hero and make some big picture predictions. We’ll leave that the gurus. In the meantime, manage existing positions. Let protective stops take you out of the stinkers and trailing stops keep you in your winners. Do that and you’ll do great longer-term.

Futures are soft pre-market.

Dave