On this day, five years after the 9/11 attack, we at TCI would like to reiterate our deep sorrow for its victims, and our continuing compassion and solidarity with all those whose lives were changed by the tragedy.
Stephen Leeb
Stock prices fell less than 1% last week … but so what? Since August, the weekly pattern has been higher highs and higher lows – the very definition of an uptrend. Shallow corrections and broad-based rallies (which we have also seen of late) are the definition of strong momentum, and also imply further gains.
In fact, as you’ll recall from last week’s update, almost all the short-term indicators we follow read favorable for stocks. Market sentiment is supportive, as evidenced not only by the low levels of speculation and specialist shorting but also by the high level of shorting by hedge funds. We also have a positive divergence in the Advance/Decline line. The A/D chart made a new high recently, outpacing the Dow which is still working towards a new high. The A/D tends to lead the market, so its gains now suggest the Dow will hurry to catch up.
(F.Y.I. If the A/D line were lagging while the Dow was making new highs, that would be a bearish sign. Something to keep in mind for the future.)
We see no reason why the Dow and the S&P won’t make new highs in the near term. That’s not a sure thing, but it is a likely thing.Read more...