Morning Report – May 1, 2014
As I mentioned yesterday, with several of the major indexes near 52 week highs, I am skeptical about stocks as a whole breaking down. Today’s headline in the business section of the local newspaper shouted in bold type that the DJI hit a new high, and most people, and the general media, assume that if the DJI is at a new high, all stocks are doing well. As we all know, this simply is not the case. Few people understand that the DJI is a price weighted index.
Any index less than 2% away from its 52 week high is at, or near its breakout point, so many of the broader markets are within striking distance of a new high in the near future. This is a problem for short index players who concentrate on the /ES mini’s and the SPX cash market and are trying to pick the top. With an accommodative FED, and few other places for the average investor to get a return on their money, the bias remains up to neutral for the indexes within 2% of their highs. Read Full Report