Jerry Samet
01-01-2014, 01:01 PM
The market ended a strong year on a positive note yesterday as the major averages all went to new all time or 52 week highs. The COMPQ lead the way with a gain of .54% while the SPY rose .40%. Volume was slightly higher across the board, which is a little surprising on New Year’s eve day. A late rally saw all the major averages close at their highs of the day, which is a positive sign. Leading stocks had a good final session also with the leaders index rising .93% on lower and very light volume. The index remains in the consolidation it has been in for over a week and it’s relative strength line is in the same position. Leaders as a whole have not broken into new high ground yet as the major averages have but the index is holding steady above it’s 9dma, a good sign. It was a very positive year for the market with the major averages showing their best gains since at least 2009 when the current cyclical bull market began. The are many warning signs out there now, such as the high number of distribution days and the extremely high levels of bullishness in the Investors Intelligence numbers. Also the current cycle is very old as March of 2014 will represent five full years since the current cyclical bull began in march of 2009. Few cyclical bull markets last this long. There are a lot of cross currents in the market now, but the bottom line is that you don’t argue with a rising market, you take advantage of it but keep a close eye on the exits if signs of weakness in either the major averages or the leading stocks show up. The action we saw in 2013 was very positive, but we should keep in the back of our minds that 2007 was also a strong year and the fourth quarter of that year saw the top of the last cyclical bull. We don’t know what 2014 will bring and the high amount of money printing by the Fed is having a strong upward pull on the market. Personally I hope that this year will bring the real bear market that many thought would start before now. This would clear the way for a new cyclical bull market and possibly, according to history, the start of a new secular bull and the end of the secular consolidation we have been in since 2000. Time will tell. I hope everyone had a great New Year’s eve and a good and happy year ahead. Jerry