The pundits are telling us there will soon be a correction, but it will likely not occur when everyone is expecting it, as they are today. Big corrections tend to come when few are expecting them. How much longer and higher does the market go until we reach that point?

The markets have blown by their 50-day and 200-day moving averages and now are breaking through the first important Fibonacci resistance levels. And sometimes, various indicators can have a lot more or less meaning than in other times. For now, it’s the momentum and sentiment that makes the biggest difference, and not so much the statistics of analysis that works better for the longer term. The sentiment is difficult to gauge when the percentage of bulls seems high, but the story is all about the possibility of a correction. There is the possibility of a big correction from 11,000 to 9,000 on the DOW, but we have to get this bullish momentum period out of the way first.

TwoHands, that is EXACTLY my point. As long as the overwhelming “pundit” concensus is that a significant correction draws near, expect the opposite. The market likes to fool most of the people, most of the time! These are the same “pundits” that did NOT recognize or believe in this current & historic rally. Don't get me wrong, there will be ”PLENTY” of pullbacks along the way and today is a perfect example. The “LONGER” term target remains in tact.

I still think we are stuck in a deflationary spiral. I wish I grabbed the SMN (basic materials ultrashort) on friday when I had the urge. It's not like it can't or won't happen again, but I don't know where the market is headed. I'd like to side with the “opposite of the consensus” opinion, but I'm terrible with charting and I just don't know.

The market is already attempting to recover and rally once again after a four day pullback of roughly 4%, which relieved some of the overbought condition created during the previous run. So now the markets are poised to jump to new recovery highs, with many of the market areas starting to respond in a positive fashion once again.

Once again it goes to show that when the masses are looking for a deeper correction, it often doesn’t materialize until a lot more complacency is apparent. Along with stocks, the charts for Gold and Oil are also becoming more bullish, which may show that the next rally could be very strong and as dramatic as it was off the March low, when Gold & Oil also moved higher in tandem. The potential remains for another 10%-20% of upside for the indices in the near term, eventually leading to a possibly larger correction, but this will NOT happen until it’s LEAST expected!

Optimism..is there a general trend…over time….of stocks idling during the summer (low volume) and a “surge in the Fall?  particularly Sept /Oct ??

THANKS OPTIMISM….. You “trade what is”…..but with this in mind….Sept being the “worst month for investors”….and albeit “now-is-now”….it pays to keep that in the back of our minds.

Much appreciated.

I took several profits today over stocks I just purchased 1 to 3 weeks ago.  13% and higher profits on all – too good to pass up.  Still don't know if it was the right thing to do – if I should have let them run.

Still looking at taking some profits on a couple others – don't know yet  but I figure in this market take 'em while I can.

Just purchased a bio tech this morning – maybe 1/2 an hour ago and it is hovering at a 12% prifit already.

Very tempted just to cash in on that one but it still is rocking and the Dorsey Chart looks smokin' so I think I will continue to hold but watch it closely.

Very difficult to let stuff sit there with profits of between 13 and 20% and not sell given what we have gone through in the last year and a half.  GDX up 21% – I want to sell but I think gold will keep going.  Always somewhat of a guessing game. 

I think my main focus going foward will be to prepare for the upcoming inflation we are going to eventually see and try to make some profits along the way until it hits.

Last week the markets gained between 5%-6%, and now a reload with a dip of about half that would fit within the overall trend of the past six months. A pause like this is normal after the strength that the markets have seen again over the past week.

The Current Trends:

Investor Sentiment – Meandering around average levels with no extreme expectations.

Advance-Decline Line – Bullish new highs and confirms the recent market strength.

VIX – Continued steady erosion that supports further upside for the market.

US Dollar – Has no clear bottom yet. Technical target is 72.

Gold – Breakout through 1000 projects another 100 to 300 higher.

Oil – Building for a potential strong rally to near 90.

Natural Gas – There are some early signs of a bottom developing.

DJ Transports – The recent highs confirm the bull trend.

DJ Utilities – A slow but steady rising trend.

It already is a’brewin. I swear they’re like a bunch of third graders. I want to call Mark Harmon in character from NCIS and have him slap both China and the US in the back of the head. This is from greenvilleonline.com, article dated September 15th…

Last month, Beijing was forced to change its tariffs on imported auto parts after losing an appeal of a WTO ruling in a case brought by the United States, the European Union and Canada. They challenged Beijing’s policy of requiring automakers to use at last 40 percent Chinese-made components or pay more than double the usual tariff on imported parts.

So first China does something and the US goes running to Daddy then the US hits back and now China is crying. Babies, I tell you — every blessed one of them.

Post edited 10:48 am – September 16, 2009 by TwoHands

The US isn’t without some chips in trade with China. We’re probably the largest consumer of Chinese made goods and Beijing can’t afford to piss off Washington any more than the other way around. Both countries are posturing – it’s like {I apologize for the almost NSFW analogy} they want to see whose manhood is bigger. That’s why they look like third graders to me.

As for NCIS, the team will go to Somalia and rescue Ziva. She will return to the US with them after being convinced her father set her up and finally realizing that Dinozzo actually did shoot her boyfriend in self defense.

Just don’t ask me which stocks to buy.

One of the drivers behind the recovery is that investors are being driven to invest the cash that has been woefully underperforming for the past six months. This is a trend that can last for some time with the volume growing and the move accelerating as the fear of missing out continues to spread. There are now more rumblings that the end of the recession may be at hand, and as this sentiment grows, it could result in even more of a rush to buy stocks.

Unusually large moves to the downside are often followed by dramatic moves to the upside. This often occurs in individual stocks, and occasionally the markets. The chatter is that the market could move back to its pre Lehman levels, which is the 10,000 to 11,000 area on the DJIA. There’s little resistance between here and 10,500, as the markets fell so quickly, so the move back through this area could also be quick and it appears to be what is happening. If investors pile into the market within this light resistance area there could still be further dramatic moves to the upside.

Look for buys in issues that are moving up, but still have plenty of room between their current prices and their levels of two years ago. Many of these high potential names show up in the industrials, healthcare, and basic materials sectors.

I'm going to guess that large trucks were selling well because with the clunkers program people could get large discounts on trucks that had a very small increase in fuel efficiency. Most of this (IMO) just shifted future demand into the present, so car/truck sales will likely collapse again. Additionally, I believe that some option arms are timed to reset in 2010… so hang on?

We are entering early recovery in the economy and bull market with stocks. As stocks climb in a bullish trend, groups of stocks tend to go through a progression from one group to another. There have great gains in the Tech and Financial sectors, where the market rally has brought many of the key names back up to pre-bear levels and into areas of some heavy resistance. Stocks in these sectors are not sells or even at tops, but expect further advances to be much slower than their initial recoveries.

Now more economically cyclical areas, such as basic materials and industrials, are taking over leadership. There is also the beginning of a movement into more defensive groups, such as Consumer Staples, Health Care, and other late cycle stocks that could last many months. Small-cap stocks have been outperforming the broad market, and this difference can become more exaggerated. We are still a long ways from any kind of critical and dangerous euphoria. Good trading to all.

There are still many concerns about the economy and the future, and yet the market continues to climb the wall of worry. There is no big volume and not much in the way of bullish news, but there is also no heavy resistance on the market for the next 15%-20%.

The market fell through the 11,000 to 9,000 area so quickly a year ago that there is just not a lot of volume or data points to get in the way of the advance. So the rally continues and amazes the participants and defies normal analysis. So for now it appears we are headed to a bullish extreme at what could be much higher levels than we see today.

I want to know what's happening in the market. I've been watching and this turndown looks weird to me. Could some one post an opinion, please.  Is this a correction, the typical Sept. turn down or an early Oct. pull back ?? Thanks