The market looks both strong and weary depending on how one looks at it. I think Datalink (DTLK)* and Multiband (MBND)* charts are indicative of what we might expect from the general market; a strong performance but sharp corrections along the way. It would not surprise me at all to see a sharp correction in the general market. However, my comment as of now is we are seeing rotating corrections within the market. Individual stocks are making big moves, correcting, and another stock takes off. This is good action.
When viewing the number of stocks trading above their respective 40 day and 200 day moving averages prices it looks like the market might be extended again.
72.64% of companies are trading above their 40-day Moving Average. The low of March 17th was at 27.7%.
For the 200-day moving average it is currently at 78.34% with the correction low being 68.58%
Conclusion: The longer term 200-day moving average suggest a more stable and positive market trend while the shorter 40-day is rising and correcting around the more stable and rising long term trend.
Chatter on the Street is the US Dollar will rally in the second half of 2011 with the stock market correcting after QE 2 expires. In order for the US Dollar to strengthen, we should see interest rates rise, in my opinion. That might actually be a good thing. While banks say they have money to lend, they are only working with the best credit scores. If interest rates rise, it is anticipated that banks will lower the credit scores they will work with because they can get bigger margins on loans with the higher interest rates. This might be good for real estate transactions and values. A rising dollar would be negative for gold which is looking a bit toppy. No strong trends yet other than stocks are strong and oil is strong. Gold is flat Vs stocks and oil. Interest rates are low but expected to rise in the second half of 2011.
|Portfolio||First Quarter YTD 2011 Performance – April 1, 2011|
|LOTM Under $10||up 12.5%|
|S&P 500 Industrials||up 5.88%|
|S&P 400 Mid Cap||up 9.64%|
|S&P 600 Small Cap||up 7.75%|
|The above figures do not include dividends.|