As expected, we did witness profit taking in the early going last
week, but it was surprisingly muted, especially given that the
SP 500 failed to take out key resistance on Fri. 4/18.
The market did take out that resistance by a whisker this Fri. to
close at a new rally high near 1398. Importantly, there is top - of-
channel resistance at 1400 dead ahead. A closing break above
1400 by the SP 500 next week would be a small piece of evidence
that a positive reversal of consequence is underway.
As of now, short and intermediate term uptrends are in place,
with the market laboring under a moderate short term overbought
condition. Morever, the market is extended enough in the short run
to take a correction of nealy 3.5% without fracturing the positive
trend underway since mid- March. This situation brings up the
same caution mentioned last Fri. about being disciplined and careful
not to chase. Since the rally is a good ways away from being in a
confirmed, sustainable uptrend, it is wise to keep the bear market
admonition that rallies are excuses to sell firmly in mind.
There is some interesting "buzz" circulating on the fundamentals side
of the markets, and I plan to use the next week or two to put the
focus of the blog on these issues.
- Peter Richardson
- Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!