Thursday, May 9, 2013

The Rubberband Is Stretching

The market is like a rubber band. It's always swinging up and down, and then up again. Sometimes these moves are taken to extremes. Overbought can stay overbought for a long time, and get even more overbought. Same thing goes for oversold. But at one time, the rubber band shoots to the opposite direction.

We've seen one of the best first four months in S&P500 history. But when and where will this end? What kind of news will it take to pull the rug from under Mr. Market's feet? Will this month of May be an exception on the saying 'Sell in May and go away'?

5m-chart SPY:



Daily charts DIA, SPY, QQQ and IWM:



Euro, oil, metals
All had a pullback of almost or more than one percent. Even the euro, which is now trading at 1.3035 and close to the low of the last four weeks (1.295).

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