Stock Market -- Technical

The powerful, compact uptrend that began in mid-July '06
was destroyed by a brief, fast sell-off in late Nov. But
the market righted itself and has embarked on a new uptrend
running from 11/27 through the present. The momentum is
decent but less ambitious than the Jul.-Nov. run. In
both runs, the dips have been bought quickly and so have
been shallow. The surges up are moderating, as profit takers
are moving in more quickly as the rally goes along. On
balance, the advance has been orderly and disciplined, with
none of the divergences evident that would signal a speculative
blowoff. Sentiment measures are bullish enough to warn, but
are not yet egregious.

The rally blew right through the seasonally shaky days of Sep.
and Oct. February is a seasonally weak month, and attention
should be paid. From a cycle perspective, the latter part of
March may hold even more risk of some damage.

An intermediate term overbought condition developed in late
autumn of last year, but this was largely relieved by the
sideways action running from mid-Dec. through mid-Jan.
However, the strong price action in the composites since
the end of January has re-introduced an overbought and has
turned my breadth model and my favorite non-cap. weighted
index, The Value Line Arithmetic ($VLE), short run over-
extended.

Short term, I like to watch the market against its 10 and 25
day M/A's. In a rising market, a break below the 25 day M/A
catches my attention, particularly if the "10" follows suit.
See here.