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The Invisible Pullback

 With today's employment numbers economic data continues to improve which is sending the stock market on a climb that is up, up, up. Many are befuddled at the lack of a selloff but consider my big picture perspective:


1-Most investors are underinvested and want to buy on a pullback. This means that current money in is extremely satisfied and not selling. Simple law of supply and demand will keep this rally going until the economy gives a catalyst to sell. Until that happens, there are no sellers, only buyers.


2-Step away from the volatility of the last year and a typical bad year in the market means you are up only single digits or in a really bad year down single digits. Now that the financial crisis has ended, we can go back to business as usual. A really bad year after 2007 should have brought the Dow down to 11,000-12,000. Meanwhile we're still down at 8,500! This market has 18 months of ground to make up to get back to those levels which still represent losses since 2007. Again, everyone wants in, nobody wants out. Be careful about which side of the fence you're on.


3-If you haven't read my investors handbook on Economic Timing called 'The Crash and Burn of Buy and Hold' you are doing yourself a disservice. The strategy has been spot on in predicting the market selloff at the end of 07 as well as identifying the recovery that began in March. In this era of extreme overreactions it is the new way to invest. Purchase it by going to the E Weather Station at economicweatherstation... and clicking on the Investor Handbook link on the top of the page.


Have a great weekend.