This week the market shrugged off news about the debt extension for Dubai West, the state-owned investment conglomerate. As the market fell over 200 points, buyers stepped in and kept things from getting ugly. My guess is these were the last of the money managers and late-comers to the now-nine-month-long stock market rally. They want to show their investors they did not miss this rally before the books are closed at the end of the year.
Marketdoc took profits on some of the short positions which were held for the past few weeks. Rallies as powerful as 2009 will not give up easily and the market rebounded to a new intra-day high on the Dow and S&P. But be careful! The technical weakness we have been writing about is getting more significant. The Russell 2000, Amex, KBW Bank Index, Dow Transports all failed to confirm the new highs which were seen.
The chart above shows all of the technicals on the Russell 2000 exhibiting signs of weakness. We can see this pattern in many other indices and stocks as well. I still am bullish about our economic recovery. However, the technicals are playing a resounding "bass note" and cannot be ignored! I cannot always explain the "why" part. I just know what the technicals show. Marketdoc put back on more short positions this week as the market made its new highs with little confirmation of these other indices.
Note: The above is for information purposes only. Any decision to buy, sell, or hold an investment for a specific portfolio should be reviewed by your own personal investment advisor.
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