Real Pullback or "Stealthy" Correction?

For a better idea on how the overall market is performing some analysts like to look at the S&P 500 Index. They feel the S&P 500 is a better indication of the market because it includes many more stocks and cannot be manipulated as easily as the Dow Jones Industrial Average. The attached chart shows how powerful the S&P rallied through 2009. Since hitting its low of 666.79 in March the S&P has surged to a yearly-high of 1101.36. This is a whopping 65% return in just seven months! The Dow 30 hit its high of 10,120 for a return of 56%! We projected the Dow hitting resistance at about 10,200 with heavy resistance at 10,500. I'll take these results any day. This rally has been for real as the Marketdoc Report has been telling its readers since February.

As I look at the overall market it seems the long-awaited pullback may have been coming in waves over the past few months. Many stocks have already pulled back from their 2009 highs and are poised to run more. Others are just completing their pullback. We have already seen about a 6% pullback on the S&P 500 from its 2009 high. The major indexes could run more as they complete their topping pattern. IBM has already challenged its multi-year high. It seems the S&P is getting ready to challenge the 1101 high. If it spends some time there without breaking through, it would be a great time to open some put positions against these stocks as well as the indexes. Everybody seems to be expecting more of a pullback which tells me we may have still more upside to go. Remember its not how much you make but how much you KEEP that counts in the market. It does not pay to be greedy when you are investing. To take profits now at about 60% would be an above average year and certainly better than the "gurus" who missed this HUGE run in the market!! Stay tuned as the market tends to telegraph the direction it will be taking. We should see more in the coming weeks.

Note: The above is for informational purposes only. Any decision to buy, sell, or hold a specific investment for a portfolio should be discussed with your personal investment advisor.