Tony: Hey Trader Duuuudddddeeeeee, wasabi?
TD: Seems like more than a couple stocks breaking out here.
Tony: The only issue I can see is that near-term, the upside move is pretty obvious. Other than that, the tape looks good. The last bastion of near-term hope for the bearish camp was the limited buying interest and that argument has fallen away.
TD: Hey hot shot, the market has been up for six months in a row, and the last time that happened was in 1994-1995. Seems pretty extreme don't ya think.
Tony: Very true o guru of ticks - but look at those dates...the last time since...well...my momentum indicator (developed with the help of my friends at Lowry's Report) kicked in. Remember that was not an opinion based indicator. Nothing goes up in a straight line, but so far the results after the signal are in line with the norm of the prior eight signals since 1970.
TD: Long-term looking stuff Tony, what do I do now-chase? You gotta be outta your mind!
Tony: As you know, that has nothing to do with the market! How you act is up to you because a limited pull back can happen at any time, but if you wonder how the Market could see any meaningful upside consider if some laggards like Microsoft or the Drug stocks gain some upside traction. They are far from extended and how many shorts or longs are dreaming of a drop to either cover or buy what they missed?
TD: What about the Financials...I am told everyday how their demise is imminent and how can you expect upside action without them?
Tony: Well, it is funny how psychology works...you tell me the direction of the next 20% in the BKX. Every person I have asked has said down. Not one response has indicated an upside possibility. Folks tend to look at the PHLX Bank Stock Index (BKX), which may be into long-term resistance, but isn't getting smacked despite that fact. What if Banks breakout? That would be more significant than any other aspect of the tape in my view. I don't know if it happens, but relative to the market's valuation, the major financial institutions are not overvalued and very few people think they can move higher.
TD: I am sick of the Banks, what about the limited buying interest in general until the last couple days?
Tony: Professor Succo brought up that point a few days ago by quoting Lowry's Report. His mention that buying power was at a multi-month low was indeed correct. The only thing is that selling pressure was moving down at a faster pace and was at a multi-year low. If there is no supply, you don't need a whole heck of a lot of demand to increase prices.
TD: This is a dicey time indeed...I am scared to chase stocks and scared to not own 'em. The tape moving higher has only served in increasing my angst.
Tony: That is the purest definition of the "wall of worry." One thing is for sure; nothing comes easy and now that every person in the universe "sees" the breakout - expect some wild action. I would say there is downside risk, but once something breaks above resistance, that resistance becomes support because on a decline, shorts that were squeezed and held on use weakness to flatten and longs use weakness as an opportunity. Tops take time and while there are some signs of extremes, there are little or no signs of tops when you go through the charts.
TD: Thanks Tony
Tony: There is nobody better than you Trader Dude and remember to look past the next few minutes. I only say that to you in order to remind myself. Peace.
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