There’s a reason my list of Market Rules ends with #7: Stock markets go up over time. However, what is going on now could be viewed as extreme bordering on ludicrous. Comic relief on financial television used to be trotting out a market bear talking about how a massive selloff, beyond just a “correction”, was imminent. Of course the argument always had something to do with fundamentals: inflation, interest rates going up, a complete break from the age-old measure of Price-to-Earnings. But as stock markets continue to rally, those appearances are occurring less and less.
Recall last month I talked about the bearish key reversal the S&P 500 ($INX) posted during September. From a technical point of view it indicated this key stock market should turn down. However, I concluded last month’s analysis by quoting Rule #7, meaning it was going to be difficult to generate much of a selloff given the flow of investment money. October saw the $INX posted a bullish outside month, closing at 4,605.38, just off its new all-time high of 4,608.38. At this point, the best technical signal might be a move to a new 4-month low, heading into November at 4,233.13 from July. Otherwise, expected the never-ending story to continue.
