Welcome To The Dark Side

I had R2 as a target for this month, but had severe doubts we could get that far before the end of the month, and a potentially disastrous sell off mid day put it further in jeopardy. However, I underestimated the dark side of The Force. Bernanke pulled out his light saber and with two words, “no taper”, the market went ape and never looked back.  R2 seems a cinch now, and with the volume we got today, a badly overbought market looks like it is going to get even more overbought. Holy cow.

The Nasdaq broke through R2 today,. meaning we don;t know where resistance is; anywhere I put it is more or less a guess. Price relative seems to be stabilizing, but it needs to be rising to sustain a rally, at least in theory. This year has seen so many bizarre happenings in the market I don;t think anything would surprise me anymore.

The NYSE composite blew through R2 and the rise in price relative has picked up steam. This had such a wide range in pivot points this month that any target projection would have been absurdly high, but just making it to the R2 pivot was pretty absurd just a few days ago.

Here are the sectors ranked by RSI. There are now 5 sectors with an RSI above 70, a point at which we can say the market is overbought and due for a correction. We might get one, but right now that is hard to believe.

XLI has moved into first place, but there are 4 other sectors that look almost identical to this.  Notice that the last sell signal was false, and the last buy signal was valid. That is the definition of a bull move.

XLU is in last place. This did give a valid sell signal, but while this buy signal has yet to prove valid, it is pretty close, and further upside here will absolutely confirm we are in for more up side.

Despie being badly overbought, the market seems destined to head higher in the short term, as the interference from the FOMC reached epic proportions today. We did not get the tectonic gyrations we usually get on an FOMC day; instead, he market shot out of the gate and never looked back. If this doesn;t lead to at least another 5% up, I will be completely baffled.

I will have the new highs update shortly.