Markets at New Highs With Little to Fear

The first quarter of 2013 completed and we see the SPX 500 and Dow Industrials at new alltime highs, the Russell 2K and Dow Transports right up against it.  The Nasdaq of course is far off it’s highs from 2000 but there is some significant improvement here.  With double digit gains for most of the indices in this quarter alone the performance can be considered nothing less than outstanding.

When you consider the many psychological and emotional hurdles to overcome – fiscal cliff, European issues including new worries from Cyprus, sequestration and China supposedly slowing down (about the 8th time we heard that).  Yet, with those and other obstacles the markets continue to move forward.  We must learn to listen to the message of the markets rather than trying to tell it what to do.

What I find most fascinating is the lack of interest to participate.  Volumes have been low for a reason.  Oh, that usually is the case until the very end when those on the sidelines can’t stand it any longer.  Trends are soon ended thereafter, latecomers lose – you know the drill.  Rallies are usually hated, this one no exception because most believe the market is more like Walmart (catch falling prices) and less like Ebay (rising prices to the highest bidder).

But please tell me where this market is doing anything wrong RIGHT NOW?  I loathe the crowd trying to predict the action and movement, where they invariably get it wrong. Volatility is low, the market is TELLING us the water is fine.  How much longer should we be waiting?  Nobody raises a flag to tell you.  The market may take a drop — but from what level?  What if it is higher, much higher from here?

The constant worrying and warnings – ‘you’ll see, this market will come down and you’ll be sorry’, or ‘this market is juiced by the Fed, manipulated and a scam’ (been hearing that one a lot recently).  I find it hard to believe any of this advice is meant to save anyone!

In any case, the technical picture looks good here with a recent consolidation and breakout pattern to new highs.  With little in the way of resistance other than an overbought condition markets are free to rise here.  Could there be some give back?  There will be, but as has been the theme this year it’ll probably be a dip buy opportunity.

One brief pattern I noted on the webinar Thursday was an ‘every other end of month’ dip to a supporting moving average.  It happened end of December, skipped January, end of February and skipped March.  So, might we see the pattern play out in late April?  We may position for such a drop (see the chart below).