Month: December 2010

While the short and long term up-trends are intact, the leaders look very tired.   Six of the nine leaders I follow declined on Tuesday, as did 64% of the Nasdaq 100 stocks. CMG and BIDU look very weak.   NFLX has bounced up off of support and it will be important to see if it can hold. AAPL has been slowly inching up, but GOOG has been weak…..

MCP, a hot rare ore play,   had a high volume reversal on Tuesday and GLD seems to have resumed its up-trend.   However, the dollar is now headed up, as shown by this daily GMMA chart, where all short term averages (red) are now above the longer term averages (blue). Click on chart to enlarge.

While the short and long term market trends remain up, one reason for caution is the extreme bullish sentiment.   The Investors Intelligence poll now shows 58.8% bulls and only 20.;6% bears.   Readings close to 60% bullish often occur near market tops.   When I got back into the market last September, there were less than 30% bulls, and this statistic made me   confident of my wading back in on the long side. So, we are probably close to at least a minor top. The key is to wait for a definitive signal.   Break downs in some leading stocks have already occurred, as seen in CMG, BIDU and NFLX.   When AAPL finally cracks I will be expecting a market decline.   For now, with the GMI and GMI-R at their maximum levels, I remain long. One RWB stock at all-time highs is ODFL. Note that all of the short term weekly averages (red lines) are well above the rising longer term averages (blue lines).