This is beginning to sound like a broken record and the bulls like what they are hearing. Once again stocks closed the week up across the board. On the week the Dow Jones Industrial Average (chart) + 1.16%, for the year the DJIA is up almost 6%. The Nasdaq (chart) finished the week up 1.65% and for the year the Nas is up a whopping 13.31%. The S&P 500 (chart) closed the week up 1.38% and so far this year the S&P is up 8.24% and last but not least, the Russell 2000 (chart) finished the week up 1.89% and for the year the Russell is up a stellar 11.84%. This has been one of the best starts coming out of the gate for the stock market in decades and there doesn’t appear to be too much getting in its way.

Market technicians including myself have been expecting a pullback to occur and have been citing “overbought” conditions for weeks now (blog). However, these markets remain incredibly resilient and are seemingly poised to go higher. I am remaining cautious as to how much longer this incessant bull run will continue and will look for additional clues as to when the inevitable retracement will occur. There were a lot of traders and investors who missed this enormous bull run over the past few months. What kept many investors on the sidelines was and is the on-going debt crisis in Europe and what has caught many investors off guard, is the stronger than expected flow of economic data here at home.

That said, there are now a lot of traders and hedges funds licking their chops on short side opportunities in this overbought market. However, a short strategy is incredibly risky and requires an enormous amount of experience to execute successfully, so let’s see if this time they get it right.

Have a great holiday weekend 🙂

~George