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Technical Bliss

Whatever market is smoking, give it more!

Technically, market is bullish. All major indices are trading above 50-day moving averages, breaking up out of pendant formations between 50-day and 200-day MAs. This is the fourth day indices are above 50-day MA. That's all confirmation you want to see.

Of course, there are problems. Even in technicals: volume too low. Sentiment is too bullish, it's scary (you won't know that if all you are reading is Seeking Alpha, but it looks like most bears escaped here). Fundamentals are bad. Yes, we had some improvement in manufacturing, but it's really small part of economy. Unemployment is high, house market is going down, stores are closing (there are 4 empty big boxes in nearby city, some are empty for more than 2 years). Debt limit fight in Congress threatens to kill world economy. This is not a hyperbole, world economy is running mostly on US dollar, and Treasuries is the preferred way to hold dollars.

So, of three metrics two are bad. The most important one, fundamentals, is the worst. Market should go down, right? Well, it's going up. Who am I to argue with Mr. Market?

I am cautiously bullish. This week I'm going to allocate a little more cash here and there. Probably.