Sunday, September 13, 2009

Markets In Strengthening Trend

The brief, worrisome weakening of the market's leadership groups, retail and tech, seems to have resolved itself into the bigger trend, the strengthening trend: (click to enlarge)

Another problem for the bull case seems to have joined the positive trend - the behavior of the transports other than the rails. I've pointed out in earlier posts that the nice Dow Theory confirmation of this year's new highs by the Dow didn't exist if you left out the rails as the Nasdaq Transportation Index does (only 1 rail in the index) - a non confirmation of a new bull. That's worth watching because the rails are tied closely to whatever commodities are doing, and commodities these days seem closely tied to whatever confidence in paper currencies is doing, not as closely tied to the economy anymore. Well, even the transport index without the rails is now showing some vigor:

The TRANQ has busted a pretty well entrenched resistance level and is making new highs now since the March low - a pretty direct market rendering on the economy.

This all agrees pretty well with Jim Cramer's opinion on his technical analysis team (he thinks TA is silly himself). He sees a run by the S&P to around 1200 soon. However, the other day, when a viewer asked him about the out-of-control debt mountain, he confided that it worries him and that he thought it will result in a new bear market within 18 months if they don't get it under control.

I agree, but I think some geopolitical developments could derail our nice positive trend a lot sooner than that. More on that later.

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