Posted by: Bob Lang in Untagged on Mar 8, 2010
That's a good question. By some metrics yes, we're overbought and due for a pullback. But by and large the indices ae not in nosebleed territory. Oh sure, the markets are up 3% or so over the last week, and over 6% since the last reaction low on Feb 25. Given the low VIX we don't expect to see massive surges, in fact the SPX has had only 2 days of a 1% move since mid Feb, nearly a month. It's been a jagged climb since early February. But the important question is leadership. Are we seeing it and more importantly, is it credible? The fact is rotation is the name of the game now, and what's the flavor of the day may not be it tomorrow. Until that changes the momentum may carry stocks to the January highs, just more than 1% from here!