Market internal indicators (the Advance Decline line and New High New Low index) of the NYSE, Nasdaq, and AMEX all finished at multi-week highs last week. For reasons that we are likely to discover over the coming weeks, this behavior is consistent with a bull market. Furthermore, with no deterioration in momentum, additional upside should be expected. We are aware that there are a power of reasons why the equity market should not go up (just listen to the popular opinion out there) but the market is giving absolutely no suggestion that it is done. Although we try not to entertain preconceived ideas……we have a feeling that the upside in this market is going to surprise the vast majority.
Our three favorite positions as far as equity markets are concerned are emerging markets (EEM), oil services (OIH) and materials (XLB).
