For all the hype about trading through the highly watched 1063 level, this market sure feels hesitant. The most noticeable thing to me is the reversal in Gold stocks. I have been talking about gold stocks for quite some time and one thing that I find consistent with the trading of them, is that on strong openings they tend to reverse as the day goes on. Does this mean the run in Gold is over? I do not think so. But overbought is overbought and the XAU has rested (as I thought it might).
The BTK is the best performing sector on the day, up 3.5%, and it continues to push higher. I noted in today's Breakfast with Brodsky that a break above 462 should send us into the 470-480 range, which is where we are trading right now. Drug stocks feel good as well as they continue to work off a rather healthy pullback. As far as the other sectors go, nothing is jumping off the page as a screaming buy but then again if they did this job would be much easier than it is!
As I make the rounds and talk to different traders, there is only one theme that I see today. No one is convinced that this is THE breakout. Not one person has told me that this is it and you better buy because we are going to push forward from now until the end of the year. Lately, the major bear case has been that there is too much bullish sentiment. That things are too good and everything is priced into the market. Everywhere you turn all you hear is bullish talk. Just because people are talking bullish doesn't mean they are putting their money where their mouths are. That's the bottom line folks. I don't care how many people are talking about the market going higher and how that is a bearish indicator. I won't argue that. But when the talk is just talk and the market is not exploding higher on major volume (which could be viewed as a top) I tend to follow the trend. Look at today's action for instance. We are at a serious market crossroads if you will, and I don't see much weakness. I would challenge anyone to point out some signs of a topping market in today's action. Am I bullish you ask? What do you think?
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