I’ve been reviewing the indicators over the weekend; the
numbers and recent market action do suggest that we made a top Friday, 8 Jan.
The Index is now down 1.5% from its all-time high.
The 50-dMA is only 4% below the recent top, so unless the
Index falls below it, this pullback won’t be much. A drop to the 100-dMA is
very possible. That would be an 8%
correction. We already know that the Index is 14.2% above the 200-dMA, but with
all the exuberance, it doesn’t seem likely that we’ll fall that far.
Valuations are extreme and Sentiment is too high, but the economy is in recovery mode and the FED is flooding the markets with liquidity. Add in future stimulus from the Congress and a chance for a major pullback seems farfetched.
Markets are closed Monday for Martin Luther King day. Enjoy the holiday.
