Wednesday, May 8, 2013

Overbought - but Fueled by the FED

Don't fight the FED. Low interest rates will continue to fuel higher stock prices. The supply-demand pundits have not taken into account trillions of dollars currently invested in the bond market as further fuel for this rally. Money seeking better returns will continue to migrate into the stock market.

2Year AD Line and McClellan Summation Index — So far the AD Line has stayed below the 3 STDEV Bollinger Band which I view as overbought but constructive for continuation of the upward trend. Expect a correction and a retest of the highs.
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AD Line and McClellan Summation Index from mid 2006 showing the breakdown in the AD Line and SUM Index, At the present these indicators are giving no signs of a top.
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