As the old adage goes, “do not confuse brains with a bull market”. That being said the trend is your friend, and there has really not been any reason to disembark from the ride. Sure you can have plenty of secondary indicators telling you things are frothy, like bearish investment advisers in the teens near 5 year lows, but that is where technical analysis plays a superior role in my opinion. The charts will alert you as to when one should exit as I must confess I have been waiting for a serious pullback myself for quite sometime but a signal has not been given. The Nasdaq made it a perfect week gaining all 5 sessions this week and CLOSING above the big 5000 figure. All weekend I am sure you will read about the all time highs right in sight with the record CLOSE of 5048.62 on 3/10/00 (that day it reversed more than 80 handles and we all know the rest). The Nasdaq rose 3.2% for the week outdoing the S&P 500’s 2.7% finish. More light was shed on the homebuilders this week as earnings were released by some names in the group. Remarkably the XHB has been higher 18 of the last 23 weeks. We heard from a leader and a laggard in the space with LEN up 2.2% for the week and KBH up 12.5%. Interestingly enough the leader LEN produced a bearish shooting star pattern Friday and its chart trades a bit loose and sloppy, not the traits of how a real general should behave. Will it be provided “shelter” above the round 50 handle, pun intended.
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