Dow at New Highs

Apr 18, 2007: 8:20 PM CST

My hat is off to the Bulls and Buyers – the Dow reached not only a new intraday high, but a new closing high.  The psychological barrier of 12,800 is now breached (officially closed at 12,803).

The psychology of investors and traders ranges on disbelief and relief. I’ve read a few accounts of traders using ‘four letter words’ to describe the recent market advance, and have either sat on the sidelines or attempted shorting.  Some are euphoric and hopeful.  Nevertheless, there are enough disbelieving bears out there that the market can continue creeping higher against them.

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Unfortunately, the Nasdaq has not yet reached highs above its February 2007 swing high, and is still 50% below its all-time high above 5,000.

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Both the S&P made a new multi-year high and the Russell 2000 made a new lifetime high.

Odds still favor long (buying) in this market, yet notice that the market is currently overextended and odds favor a slight pullback or consolidation before advancing higher (notice the previous swing patterns that have lead us to this point).

Keep studying, analyzing, and trading to build experience.  Trust the charts and the pure price over indicators and TV news and sentiment.

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