The Weekly Report
for May 21st, 2007
Market Summary - A Time To Take Profit?
The Dow's run into uncharted territory continued as the index surpassed the
13,500 level for the first time in history. Last week's surge was aided in part
to higher-than-expected consumer
confidence and various corporate buyouts. It seems
like only yesterday that we were asking ourselves whether traders would be able
to send the Dow above 13,000 - the psychological barrier that is now a fair
distance away from current levels. The question now becomes where will this run
end? Is 14,000 next? I think most traders would agree that this rally is
unsustainable at the recent rate, but trading against the trend will be
dangergous and timing a correction will be extremely difficult. It may be wise
to take some money off the table and wait for a clearer picture of what will
prevent this rally from correcting.
In our last report, we
mentioned that various economic realeases would continue to be the important
catalyst that would help keep the uptrend from correcting. Sronger-than
expected consumer confidence numbers were definitely welcomed by the bulls. The
markets are currently in an interesting state because continued strength on the
economic front could keep the rally moving higher. However, with any signs of
weakness we could see a quick correction toward the support of the longer-term moving averages.
Senior Analyst, ChartAdvisor
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