Sector Investing

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Actually I follow all the same kind of indicators myself with my own charts. The market is still at risk of a sell off but we are in the sweet spot of an economic recovery.

According to my indicators and what Leavitt Brothers follows the market especially was at risk a couple weeks back. Even before the Leavitt Brothers e-mail came saying it was time to be careful I sold some of my positions thinking we might get some selling.

While some stocks have seen some profit taking while the market has continued to rise with fewer new highs and more new lows along the way.

You can see that here on these charts:




But looking on a longer term chart you can see why market breadth indicators can only give you a feel for when the market is overbought or oversold.





The BPNDX which we all follow here has been overbought for a very long time. But although that tells us the market could decline it does not mean it has to decline.



Ultimately it should be understood that economic cycles trump market breadth and market sentiment indicators. Right now the FED is still very much doing all it can to stimulate the economy. I'm very skeptical about how much of a recovery we are going to get ultimately but a market top now would be very atypical and premature. We should be seeing less participation as the rally matures but an ultimate high for the market on this cyclical recovery may be as much as 1 to 3 years (who knows really!) in the future:



RtS