The collision of global markets and social mood

Tuesday, March 12, 2013

The First Rule Of Flying

I can't recall seeing such persistent rot in market internals as right now. Price is undeniably strong while internals are undeniably weak.

The number of advancing stocks is declining rapidly, while the number of declining stocks is rising rapidly. This has been occurring since January 2nd.

Ticks are in a sharp down trend since February 19th.

"Nyse new 52-week high-low difference" has been declining since January 24th.

"% of S&P above 20, 50, and 200-day moving average" has been declining since January 4th.

None of this matters until it does. But it will not lull me into a sense of complacency. The first rule of flying a plane is Trust Your Instruments. I trust my indicators.

I also trust that price can continue for as long as it wants. So when markets get like this, it's best not to fight it. Clarity will reappear later.

1567 is the last Fib zone I'm targeting before the 1576 all-time highs. I'm not really interested in the all-time highs; I'm interested in the 13-year trend line at 1600. I think the market may be, too.

Below, there is a volume shelf at 1544 and the breakout area of 1530.94. It does appear that buyers are being sucked in at current levels. A flush could happen at any time. I'm not counting on it, but I'm positioned for it. However, I will not further position for it.

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