A lot of my colleagues are worried about the market right now. I don’t blame them — I worry, too. But I think it’s going higher before it goes lower. This just shows that smart people at the same organization can have differing opinions. Here’s my chart of the Dow …
Note that the Dow pushed over the 200-week exponential moving average — which some traders use as a dividing line between bullish and bearish markets — pulled back, and then pushed above it again. If it holds at this level, that’s quite a bullish development.
What’s driving this? Two words: “Free money.” Washington is throwing free money at the banks. The banks don’t want to lend it to ordinary people, so they play the markets. Is this healthy for our economy longer term? No. Make that: “Hell, no!” But it’s the way it is.
There are also some bullish indicators on the economy. When I want to check on those, I usually go to Bonddad’s blog. It’s a great resource, and probably should be on my blog roll. And for great economic analysis with a more bearish outlook, there’s Calculated Risk, which is on my blog roll.
These sites are run by two very smart groups of people. They are both looking at the same indicators, and yet one is bullish, and the other is bearish. How can both be right? Ladies and gentlemen, welcome to the markets. They say the market likes to climb a wall of worry, and I think the next rung on the Dow takes us over 11,240.
I am prepared to be wrong, and to change my views if necessary. Are you prepared to be wrong? Are you willing to change your views? That’s a requisite for successful trading. Good luck out there.
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Got to be positive on the Dow Industrials for the next seven months. Technically, I see a srong rally this summer culminating in a significant high first week of November 2010. Look for a test of 12,500. Should the market confirm this number liquidate all longs and consider shorting the DJIA.