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Happy Valentine’s Day: Gotta Love the Offensive Team

For the past several weeks we have been flirting with the 14,000 level with the Dow.  It has traded above that level a few times but not enough to break the 14,198 level of October 11, 2007.  We all know the stock market drops faster than it climbs.  From the old high, it took 17 months to wipe out what took 47 months to recover.  Here is a long term chart of the Dow Jones Industrial Average from 1895 through 2012.  For the past 13 years the markets have not done what they “are suppose to do”.  But when you view this long term chart we find that the cycle we are in is normal.

Here is another chart showing stock market performance since 12/31/1999.  Click to enlarge.

Should the Dow Jones Industrial Average break the previous high level of 14,198, we may see new demand for stocks.

Here are the indicators this week.

NYSE BULLISH PERCENT:  The main coach remains on offense at a level of 74.99%.  We remain at a “high risk” level.  This does not mean that the financial markets have to come down but rather investors should be in a more conservative attitude versus the 60% risk level we were at in December 2012.  It is also a good time to consider sell stop orders or creating a plan for a more defensive strategy should that be necessary.  Offense.

NYSE % ABOVE 10 WEEK MOVING AVERAGE:  This 10 Week Indicator is still in a column of O’s at a level of 80.68%.  A move below 70% would be a short term sell signal.

OTC BULLISH PERCENT:  The main coach for OTC stocks suggests offense as well.  The risk level is 54% Bullish and a column of X’s.

OTC % ABOVE 10 WEEK MOVING AVERAGE:  This short term indicator remains in a column of X’s but is also .80% away from reversing to a column of O’s.  The current risk level is 70.80%.

SECTOR DISTRIBUTION CHART:  Click Image

We did have one sector decline this week. That was the Protection and Safety Sector.  Precious Metals remains the only sector that is showing little demand.  The average risk is now 63.36%.  This is a good time to review your positions and begin to think two steps ahead as to how you might want to respond should demand start to diminish.

DOW JONES CORPORATE BOND INDEX:  Not much new here.  We do have the long term chart in a column of O’s suggesting caution but this long term chart remains on a buy signal.  The short term chart is in a column of O’s and on a sell signal so we need to watch corporate bond prices for direction.

RELATIVE STRENGTH: No change in the order of relative strength.  The International Equity asset class continues to gain strength.  The current relative strength order is Domestic Equity, International Equity, Fixed Income, Foreign Currency, Cash and Commodity in last place.

Call or email me any questions.

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