Dow View May 17

May 17, 2007: 8:21 AM CST

A reader informed me I failed to include the Dow chart in the recent chart analysis so here is today’ s Dow Jones action – the Dow has held up the strongest in the recent environment, perhaps because of capital flowing into larger capitalized securities.  The Russell (small cap) is still showing relative weakness.

dow-may-17.png

We see declining momentum, which is characterized by all the indexes which serves as a warning, and not a reason to exit long positions.

All moving averages have formed a highly bullish angular pattern and continue to rise (look at how nicely the 200 period average is rising – about a 33 degree angle).

A trend is clearly developed, and odds favor continuation, yet trends do end at some point, so I’m not suggesting to bet the farm with new longs in the current environment, but to enjoy the ride and marvel at the recent strength.

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