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Market Not Mirroring 2007 Top

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One index to keenly watch is Dow Industrials. Unlike Dow Transports, this index hasn't been able to surpass November 2010 highs.

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You can clutch the past so tightly to your chest that it leaves your arms too full to embrace the present.
-- Jan Glidewell

I have written about this market being different from 2007 several times (Oct 13 and Nov 8).

Here's a summary of my current thoughts. On a personal note, I do this often to be as objective about the market as possible; to learn to trade the market as it is, not as I would like it to be.

Let's see if we have similarities with October 2007.

Current situation (as of close of December 9, 2010)

1. New highs (relative to November 2010) in the following:

  • S&P 500
  • S&P Midcap 400
  • Russell 2000
  • Dow Transports
  • NDX
  • DJ Wilshire 5000 Composite
  • Semis


2. Advance-Decline Line very close to November 2010 highs

October 2007, with S&P and Dow Industrials at new highs

  • Advance-Decline line had peaked in June 2007
  • Dow Transports lower than July 2007
  • Russell-2000 lower than July 2007
  • Semis lower than July 2007
  • Financials lower than July 2007
  • S&P Midcap 400 lower than July 2007

As market participants, we need to be aware of any disconnects, especially any lingering ones. One index to keenly watch would be Dow Industrials. Unlike Dow Transports, this index hasn't been able to surpass November 2010 highs. We would need this to be technically in sync with the rest of the market soon.

But for now, I don't believe that this market mirrors the top in 2007.

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Position in XLF.

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