Short-Term Key: NegativeRead more...

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...

Image by Getty Images via Daylife

Last week stocks retreated another 2%, when the inflation figures came out a little higher than expected, raising fears that the Fed won’t stop raising interest rates. But don’t panic. We don’t think the market has peaked.

Two weeks ago, almost all the averages made new highs – transportation, financials, unweighted averages, everything. And while that sounds “peaky” to the untrained, we cannot recall an instance where such a convergence has coincided with a major market peak. A setback perhaps is in order – 6% or 7% -- but not likely a peak.

This means that while stocks over the next week or two could fall another few percent, there should be further gains before long. If we had to suggest a likely scenario (and you must remember that the most likely scenarios seldom unfold exactly as expected), we could easily envision the Dow making an all-time high in the near future – somewhere in the neighborhood of 12,000.Read more...