New Highs Again
December started off with a bang today with the major indices closing at new 52-week highs. The NASDAQ is still below its intraday high of 1992 from November 7th, but the S&P 500 has made a clear breakout above it’s old (intraday and closing) highs. There was talk of a rotation into big caps today and judging by the S&P’s performance that very well may have been the case.
I can’t help but be amused at the commentary I see/hear in the media. Two weeks ago, when we were oversold, sitting near the 50-day moving averages and lower Bollinger Bands, the angst was so thick you could cut it with a knife. Now that we’re back in overbought territory, at the upper Bollinger Bands, and the top of the trend channels, everybody’s a raging bull again. Go figure… The way I see it is that the dip two weeks was a gift and now it’s time to get a little cautious. The market could certainly use a little pullback in this area. Perhaps the NASDAQ 2,000 touch I’ve been predicting will bring out some sellers. A wise man once said that you should sell ‘em when they feel the best and buy ‘em when they feel the worst. They feel pretty good right now. 
(Of course I’m speaking for short-term traders like myself. Others should just hold on and enjoy the ride.)
This post has 3 comments
December 1st, 2003
Amazing how well coordinated the market (and herd?) moods have been well-coordinated with the technicals these days!
December 2nd, 2003
How long before the dumb money gets wise to playing the bounces off the 50-day MA? My guess is when that happens,the smart money goes short and the latecomers get shorn.
We did get an end-of session meltup, which I’ve been told is bullish because it means the smart money expects to make some easy money on a gap up at the open. We’ll see.
December 2nd, 2003
Duru, that’s part of what I meant yesterday in our IM session about it just being easy these days. Everything has been working according to the textbook.
Tom,
I thought that we might just get a weak bounce from the 50 DMA on this last test. Perhaps there was just too much angst out there for it to fail this time. When the media says, ‘oh, don’t worry about this test of the 50 DMA… it’s held all through this rally’, that’s when it will fail.
You may be right about the melt-up. But it looks like there will be no gap up this AM, so the profit taking may be kicking in a little early.