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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OE3 greases the skids

A quick look at the Philly Financial Index which has broken above the trendline and looks to be headed back to the old all time highs (given time). All the other indexes should follow.

The Monthly(L) and Weekly $BKX Charts
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Weekly DJIA Charts

Here are the weekly charts for the DJIA components sorted by price. I've included percentage bands from the 50 week moving average.

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MCO update

We are a little overbought here but headed higher.

The SPX and MCO
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MCO update 6/8/12 - A reversal in the making.

After a rather nasty string of declining days the MCO and SUM Index appear to have reversed indicating that a new rally may be underway. I don't discount the chance of another pullback over the next several days but unless the 10% Index breaks down below -500 again, it should be just viewed as a retest.



The SPX divergences with the MCO
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