I don't believe the uptrend is over, but that is an opinion, and we know opinions about the market don't mean much. Regardless of the current news or what we believe, we don't invest based on either the news or opinions. We invest based on what the market is telling us.

 

The key item to watch right now is whether institutions step in and support the leading stocks.  It was a rough opening, but given some time, stocks are starting to receive some support. As we consult our stock charts, we ask ourselves, is this action normal or abnormal? If we entered a position properly on the chart, then it becomes difficult for the market to dislodge the position. Forget the news. The age-old saying, "A Bull Market Climbs a Wall of Worry" has always been true.

 

With that said, are we seeing wholesale dumping of leading stocks or are we seeing some profit taking after three strong up weeks?

 

Remember, we also saw some stalling action around the indexes' tops last week. A pullback was inevitable, but we never know how long or how bad it will get. So we focus on the price/volume action of the leaders and the general market, instead of predictions. Watch and see if institutions continue to support their favorite stocks. We do want to have a plan for backing away, should it become necessary. Napoleon was undefeated on the battlefield for years because he always had contingency plans at the ready. Rule number one is to "live to invest another day."

Best returns,


Scott O’Neil

President

MarketSmith Incorporated

Follow Scott O'Neil at Twitter.com/WScottOneil