While nothing has really changed regarding the risk and reward for stocks, the bulls have moved the major indices a bit further than I thought they would after last week’s one day drubbing. Frankly, I thought we would see a few days up and then rollover for another decline towards the lower end of my risk range, Dow 20,000. Instead, the Dow is in the upper middle, giving the edge to neither group.
The bears can point to the Russell 2000 lagging badly or banks not participating, but in the end, with high yield bonds and the NYSE A/D Line at new highs, any and all weakness has to be bought. Now, if the banks, discretionary and transports all rollover here without rallying first, then, we have some more things to worry about. Unless and until, Dow 20,000 or so looks like the downside with Dow 21,500 as the upside. It’s not too exciting…
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