So What Do We Do Now?

Traders and investors have been shrugging off any negative news as markets continue to power higher. For some, there is a feeling of “did I miss the rally from the bottom” and for those that were able to participate in this rebound, the question is, “should I take some profit?” In answer to the first question, prices fluctuate and markets move in waves. As such, there will be another opportunity to get in if you have not. For the latter question, the technical signals show that caution is warranted and one should certainly tighten stops or even consider taking profits.

Fundamentally, companies are still working on improving revenues and earnings. Technically, most markets are showing signs of being overbought. While the short term trend remains up, stochastics are oversold, the MACD has rolled over, RSI is oversold, and volumes have been declining as prices rise. The point is regardless of which indicators you prefer to use, they are indicating caution. Prices could continue higher, but we know that statistically, we are due for a pullback. Also the angle of ascent of this most recent rally has been rather steep. When this occurs, past experience suggests that prices could also pullback sharply. What you choose to do is of course up to your risk tolerance.

Futures this morning are negative and the DAX is negative, indicating a negative open. The market condition scans are neutral, but are showing that the institutions are engaging in some quiet accumulation as the institutional scan had a number greater than 200. The market bias indicators remain neutral.

Index	Change	%Change	Level	Phase
TSX	+92.05	+0.88%	10569.29	Bullish
DJIA	+12.89	+0.15%	8763.13	Recovery
Nasdaq	-0.60	-0.03%	1849.42	Bullish
SP 500	-2.37	-0.25%	940.09	Accumulation
Russell 2000	-1.32	-0.25%	530.36	Accumulation
NYSE	-28.12	-0.46%	6082.64	Accumulation

Source: Telechart

Short Term market outlook:

Bias: Scans showing a neutral to positive bias

Energy: weak

Primary Trend: sideways

Sector	Phase
Consumer Staples	Recovery
Healthcare	Recovery
Technology	Bullish
Utilities	Recovery
Energy	Accumulation
Financials	Recovery
Industrials	Recovery
Materials	Recovery
Consumer Discretionary	Recovery

Source: Telechart