Weighing The Week Ahead: More Excuses For Selling?
Jeff Miller | Apr 08, 2012 01:48AM ET
Experienced traders understand that markets rarely move in a straight line.
Staying with a long and strong trend -- either up or down -- is often the most difficult trade.
We expect stair steps and corrections since fundamentals rarely support such rapid changes.The result is that as a move gets more extended, even traders who have played the trend are poised to react.
I have often cited Charles Kirk as the leading source for the trading perspective, and he also has many ideas for investors with a longer time horizon.His using a technique from Paul Desmond , classifies stocks as above or below their 200-day moving average, and also whether that average is rising or falling.He observes, "As a bull market approaches a top you should see a large percentage in the topping category (BR, fall) and right now only 3% of the S&P 500 members reside in this category."Here is a helpful table.
Puplava draws the following conclusion:
"What should also be encouraging to the bulls is that the sectors most levered to the economy (cyclicals) are showing some of the strongest breadth, which is important as these sectors are usually the first to top out and enter the BR and BF categories."
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