For Now, Bulls in Charge and Feeling Festive

By Jim Koford  DEC 20, 2010 9:40 AM

We'll see if there are more signs of distribution near highs, but there are some positive seasonal factors at play here.

 


Despite a number of signs underneath the surface last week -- including a market that was once again exceedingly stretched to the upside, several days with poor final-hour action, and some indications of distribution in key market-leading stocks, including Netflix (NFLX), Chipotle Mexican Grill (CMG), and F5 Networks (FFIV) -- the market gods continued to confound anyone, including myself, bracing for some sort of consolidation. The troops weren’t able to make further progress to the upside, but the sellers failed to gain any sort of edge as the week progressed.

Probably the most ironic aspect of the action over the past 19 months or so has been the consistency of the upside momentum, and the worst way to approach the market has been to assume that it can’t last. Regardless of the fact that we continue to languish in one of the worst economic funks since the Great Depression, equities have behaved as if they didn’t have a care in the world. Debt problems in Europe, a housing market that is still depressed, and a discouraging employment picture have created some jiggles from time to time, but it hasn’t been long before the troops come roaring right back.

The easiest thing in the world right now is to gird your loins and wait for what would logically be the inevitable outcome. I don’t think that even the most dedicated of ursine enthusiasts would have thought that the indices and countless individual stocks could have made the kind of progress that they’ve seen since early 2009, but that has been this market’s hallmark, and it’s left gobs of investors willing to lean against the grain acting as fuel for the climb up the Mother of all Walls of Worry.

One thing that I can’t say, though, is that the market gods have been teaching any new lessons. Trying to pick spots and maintain a disciplined money-management approach has been tough, but it’s not like the idea of not fighting the trend or the Fed is any earth-shattering revelation.

We’re at the end of the year, and who knows what the next 12 months will hold. For right now, though, the bulls are in charge and are feeling festive as we kick off the new week. We’ll see if there are more signs of distribution near highs, but we have some positive seasonal factors at play here. We’re looking at some plays in the gold miners at my firm -- particularly Almaden Minerals (AAU), which is our stock of the week and is set to break out of a short-term ascending triangle this morning.




Position in AAU

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