The Stock Market continues to rise powerfully and those who initiated a long position on January 30th during that Monday's range of 2263.00 - 2285.75 have enjoyed a non-stop rise to this Friday's close of 2364.00. The DJI has closed higher now for 11 consecutive days from February 9 through February 24. This is the longest stretch of higher closings in 30 years, last seen in January 1987 when the DJI closed higher for 13 consecutive days. At these levels the market has become somewhat overbought, which is normal during this kind of 3 stage rally. Corrections however, are just about to begin and they will be violent and quick. As with so many other corrections this market has endured, those who have strong stomachs should maintain their existing position and add either another 1/3 or a whole 2/3 when such an event happens.
As you can see from the chart below of the NYSE advance decline line there is no sign of any divergence or even hesitation. This is one indicator that appears to agree that this market has not yet topped and has further to go.
Meanwhile, in an interesting chart, spare cash held by retail investors has fallen to one of the lowest levels ever relative to the value of the U.S. stock market:
Traders who are using leverage, on the other hand, might want to take profits here. Or at least place stops at breakeven. Personally, I have closed my S&P 500 trading positons during Sunday trading at 2366.25. Frankly it looks to me like the US Stock Market is going to continue to rise from these levels, I just think that a 70+ point rise in the S&P 500 is nice enough for a trader. I will be looking for a violent correction to reestabilish a trading position. Investors should use such an event to increase their long position.
Regarding the Short Gold Long Silver Trade
As you can see from the chart below Silver has been outperforming Gold, and has recently broken out of our a consolidation pattern. Continue to hold the long Silver, short Gold position and for those with extra funds add to the position. I think this is going to be an outstanding trade, especially if governments outlaw Gold.
Investors remain short bonds. Traders get ready to re-short on a more significant rally.
Good Trading and Investing Everyone