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Sunday, September 20, 2009

52 Week Highs

P2 is setting records in many categories. This rally is steamrolling anything that has come before it. I think that is evidence itself that it is special. But it to, will come to an end soon enough. When is that soon enough?

Well the market has broken into the area above 1044 and below 1100 that was freefall territory about a year ago. So resistance to 1100 is on the "light" side in the SPX. The DOW is a bit more challenged.

What seems quite remarkable is that the market may, at some point in the next few weeks, be back at a point it was one year ago. For instance, Sep 29th 2008 was a huge down day with the SPX dropping some 100 points and closed at 1106.39. If the market closed 1 year later at 1106.39 it would be kind of freaky.

After a brief rally, the market then closed on Oct 3rd 2008 at 1099.23. The next day, it lost 1100 support for good and fell the next five days until it hit 839 low. That 839 low was the "extreme" fear point as the VIX maxed at almost 90.

Surely the market will set one more record: 52 week highs. Should the SPX maintain an elevated state for a week or two, new 52 week highs in stocks should start to go parabolic.

When the market reaches an extreme state of most stocks ever at 52 week highs, I think that will wake people truly up (if not already by then) that they have done well to ride a rally but maybe its time to get out.

September may have been kind, but October may not be so.

I await the headlines proclaiming "markets all at new 52 week highs". This would be a sell signal for sure.

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