Continue to Ride This Bull
by Sam Collins 11/10/09
Free Trading Guides
Even with the broad rally of the past five days, our internal indicators are not overbought. And the Moving Average Convergence/Divergence (MACD) ended yesterday with a fresh new buy signal on the Dow, just as the senior index jumped to a new high for the year.
But even though the major indices have been chugging along like the "Little Engine That Could," they will shortly arrive at some overhead that accumulated back in July to September of 2008. That resistance begins at about Dow 10,365 and runs to 11,800 or so.
And the bullish resistance line, which marks the top of the Dow's bull channel, also comes into play at around 10,400.
The S&P 500's upper channel is also fast approaching along with my intermediate target for the S&P at 1,120, set back in June.
For traders, this means that another day or two of broad advances led by gold and the financials may provide for a good exit point, with the expectation that they might get another shot at buying on a pullback to below the 50-day moving average at 1,056 or even the support line at 1,050.
But for long-term investors, this recent breakout is a powerful reminder that the best course of action for them is to hang onto this bull. He may buck and break, and scare you to death, but the indications are strong that he has not yet had a midlife crisis.
Today's Trading Landscape
Earnings to be reported include: Air Transport Services Group, American Apparel, Anthracite Capital, Beazer Homes USA, Bob Evans Farms, CASCAL N.V., CGGVeritas, China Digital TV Holding Co. Ltd., CPI Aerostructures, Emdeon, FirstCity Financial, Fossil, Harbin Electric, HearUsa, Henan Zhongpin Food Share Co. Ltd., Hewitt Associates, Intertape Polymer Group, INX, JA Solar Holdings Co. Ltd., Maiden Holdings Ltd, Maidenform Brands, MI Developments, Pan American Silver, Paragon Shipping, Qiagen N.V., Ralcorp Holdings, Randgold Resources Ltd., RHI Entertainment, Shengda Tech, Supreme Industries, Systemax, Tandy Brands, The Hackett Group, Trailer Bridge, Tyco International, Ultrapetrol Bahamas Ltd. and Weight Watchers International.
Economic reports due: ICSC-Goldman Sachs store sales and Redbook.
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