Mostly: Classical

[GettingBetter]

From John Murphy

RECAP OF RECENT ADVICE ... I'm aware that some of our readers are somewhat surprised by what appears to be a relatively quick shift in the market and in my view of it. My shift to a more positive view started a couple of weeks ago. I had been negative on the market since the start of the year. I had expected an eventual drop back to last summer's lows. On May 4, however, when the market indexes started to rebound off their 200-day averages, I suggested reducing bearish positions and a shift back to a more neutral posture. That day's headline read: "Lighten up on Bear Positions" (May 04, 2005). I didn't, however, recommend new long positions in the market indexes. On Monday of this week, I described why an upturn in the Nasdaq was a positive sign for the market and also wrote about some positive sector rotations. Yesterday's climb, however, left little doubt that the market was turning higher. That's why I suggested that new long commitments were justified. And, as is usually the case, I believe those new longs should be concentrated in those groups that are leading the market higher. I'm not completely sure what impact the recent upturn means for the longer-term picture. In times of doubt, however, it's usually best to follow the market signals. At least for now, those market signals have turned positive.