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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 !!!

Wednesday, February 02, 2011

Stock Market -- Technical

The market is continuing the second upleg of a cyclical bull which commenced 3/09.

The SP 500 is at best only mildly overbought short term. It is significantly overbought on an
intermediate term basis at a 12.7% premium to the 200 day m/a.

Over 90% of "500" stocks are trading above their respective 200 day m/a's. In a cyclical
upleg such as now, the 90% ratio can continue for an extended period of time. Confidence/
complacency as measured inversely  by the VIX volatility index is at a cycle-so-far low of
17.3 The chart below shows that when the % above 200 day m/a for the composite ($SPXA200R)
is quite high relative to a cyclically low VIX, you need to pay extra attention because it can
signify that an extended rally is growing ever more mature, in that increasing confidence is
well reflected in the price action of the market. Chart.

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