The fall season is typically a time when we see the market pull back significantly. There are a number of theories and reasons for this which have been expounded upon countless times. It makes for some very interesting reading. The current market surge has seen the most gains in the Dow for the same period of time since the post 1929 crash!! (Source: ChartoftheDay.com) WOW! Many are calling for the current party to come to an end.
Here are a few reasons why we may see the market continue to move forward before any significant pullback:
1. Just about everyone expects some sort of moderate-to-significant correction.
2. There is still a fair amount of cash sitting on the sidelines. The pressure is mounting for these money managers to put their cash to work.
3. Although earnings are still depressed at historical lows, there is plenty of room for upside surprises. The market typically reacts favorably to upside surprises.
4. Inflation is still relatively benign.
5. Our Marketdoc technical indicators place this current run to reach resistance somewhere at the 10,000 to 10,500 level on the Dow. If we break out above our current "wedge" formation we could see more like 10,500.
6. The economy is recovering.. this is called "the Business Cycle."
We have seen some tremendous trading opportunities for 2009! Stay tuned to the Marketdoc Report for continued updates on this historical time to invest in the market.
Note: The above is for information purposes only. Any decision to buy, sell, or hold a specific investment should be discussed with your personal financial advisor.
