As we pass the halfway point of February, the market has totally perplexed even the most bullish among us, rising steadily despite weakening technicals, lousy earnings reports, and apocalyptic news from both Europe and the Middle East. At some point we will have a correction, but any we have now will be quite modest. CMF, which hit nosebleed levels a month ago, has stayed there, indicating that there has been very littlw big money selling. The pivot points, and the formerly improbable target of 1378, stand.
Unbelievably, we are not even 10 points off the 2011 high. Any sign of slowing down here? No.
The Nasdaq has the distinction of regaining the entire 2008-2009 bear market. The price relative line, which was dropping last year and had me convinced we were going to have a significant drop in January, inexplicably reversed just before January started and hasn't looked back.
Notice that the price relative on the Dow did the exact opposite. Also notice that when the price relative on the Dow is dropping, the market is rallying. I am no authority on Elliot Wave theory, but this sure looks like wave 5 off the 2009 bottom. If so, then we still have a long way to go.
Not so fast, we are getting non confirmation from the Dow transports. While I don't think this is a terribly important index, this does appear to have topped for now, Volume on the way down is low, so there is no reason to panic, and the rising 10 week line will very likely provide support.
The Russell 2000 is another reason for concern, although to a much lesser degree. This is the first sign of relative weaknessfor the year, and has been long enough that is may be signalling a pullback coming. Then again, maybe not.
I will have the new highs update shortly.
