Wednesday, October 13, 2010

Rally Broadens Further

The rally continues to broaden out, with lagging groups now participating.

Financials and Insurance have been lagging on this move, but they are very important. A move above $54 on Financials (IYF) would be an important turn in the opinion of market. Insurance (KIE) has stalled after breaking out, which is bullish.

Berkshire Hathaway (BRK/B) has been stalled out at old highs for several weeks.

Crude Oil (OIL) has been stuck underneath its 200-day average for the past five months. A break above would tell you that the sentiment has changed from Bearish to Bullish.

Keep in mind that many breakouts fail and these failures often turn into vicious losses over a very short period, so committing money is a process, which requires constant monitoring. But this is the first time stuff has been working like this for many months.

Treasuries have broken bullish symmetry and look to have a deeper correction. That could be the start of money flowing from bonds into stocks, which would be even more bullish.



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