Monday, April 26, 2010

Weekly Outlook 4/26

Entering the last week of April the market is in full melt up mode and I see it continuing up thru 1230 on the SPX and possibly 1250 soon after. Nothing seems to stop this bid in the markets and its becoming a chase for performance once again. People are starting to chase this market higher as it runs away from them and adding to that the shorts have to cover every time new highs are made because they are proven wrong time and time again. This is how topping processes usually start out but they are processes and that's why calling tops is a foolish game whether your name is Elliot Wave or not. The trend is your friend.

I do expect the next month or so to be more of the same with a blowoff top of some sort coming in May that precedes a small correction by mid month. The volatility should increase in the blowoff move as it usually does as everyone tries to pile in to the mosh pit to experience the thrill. Until that happens we will see this continued grinding sort of melt up. Each dip has been bought whether it's been another Greece story or the GS saga. There are unreal single stock stories out there this year whether its AAPL, NFLX, CREE, or LVS. These names have seen amazing explosions in the last few months and the momo should continue.

While this may not be a huge surprise to you, the Goldman Sachs fraud charges seemed to shake retail investors' nerves, as last week's American Association of Individual Investorspoll revealed that the percentage of bullish investors dropped from 48% to 38%, and the bearish percentage jumped from 29% to 34%. This can extend the duration and magnitude of this bull run as emotion is not at the frothy levels it may have been before the GS scandal appeared. 

Bottom line is that I know its hard to be thinking this market can go to SPX 1300 but weren't you thinking the same thing in late 2008 when the SPX was at 950 and saying no way we see 666. Well it happened. I never have many expectations in the market I just try to let the market tell me when it wants to move. The markets will ALWAYS overshoot value and where they 'should' be simply because markets are made of up of the aggregate emotions of all participants involved. Be rigid in your disciplines and flexible with your expectations.

Buy the dips>> APC, APL, GLD, OIH, RYL, ANR, BUCY, BYD, BA

Sell the rips>> RIMM, NTRS