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Although I consider the market to be extremely dangerous based on my
TBill/EarningsYield ratio model, I'm not particularly bearish and won't
become so unless/until the 1153/1155 area is decisively breached. The move
up has been powerful and it will take more than a correction to negate the
bull. Further, a very powerful cup and handle formation has broken out to
upside and projects prices much higher into 1500 area. One of the better
leading indicators I use for identifying tops is broker stocks (i.e. the
Amex Broker/Dealer index) and this index shows no signs of non-confirmation.
Further, my very long term work suggests that the S&P 500 is likely to reach
the 1600 area (give or take a bit) before the mania exhausts itself - not to
say that external events could not disrupt this scenario.
As a trader I tend to work much shorter time frames so the long term does
not concern me. As an investor I prefer to buy investments which are in low
demand and sell those for which demand is high. Accordingly, my US stock
holdings are very thin and I've been very long Asia for some time.
Earl
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