A dip and some dip buyers

The market opened the day down on some less than perfect earnings reports.  When the market is priced for perfection there is little room for any errors.  But this market continues to show resilience as the dip buyers came and drove the indices back to flat.  Small caps did very well yesterday but the high flying international stocks finally took a break.  

We are now starting to see some of the shorter term indicators move to extreme overbought levels.  The NYSE is now more overbought than any time during 2005.  That isn't always a bad thing for the intermediate term but it should get tougher for the index to move much higher until we see some sort of consolidation or pullback.




                                   Chart provided courtesy of www.decisionpoint.com

The bottom indicator is the 55-day moving average of the ARMS Index.  This is a long term measure of internal market strength.  This indicator has been at or above the 1.00 level for several weeks now.  It is at the highest level in recent years.  Readings near 1.00 tend to bring about a pause to rising stock prices.  It doesn't necessarily mean we are entering a bear market.  But like the overbought/oversold indicator above in blue, it just means we probably need to take that rest now.

Bonds have been consolidating for a couple of weeks now.  With yesterday's weakness, the 30-year bond is either going to find support here and move higher or it is likely to test the lower support levels. 


                                   Chart provided courtesy of www.decisionpoint.com

Any more weakness this week and we should know whether we need to lighten up on our bond holdings.  If this support hold we can probably add to the bond position.  A couple of bond indicators I watch are showing that, even though interest rates may not be moving much higher, the rally may be close to over for bond in the short term.  We'll see what happens.

Oil is quietly moving back higher.  It briefly moved above $64 a barrel yesterday before pulling back below.  That's about $7 higher than around Christmas time.  The stock market doesn't seem to mind however.

Still waiting for stocks to take a break.  Somebody wake me up in a couple of weeks.

That’s all for today.  Currently 50% G, 50% F.  Thanks for reading.