The Dow Jones Industrial Average rose 42.47 points, or 0.3%, Wednesday to close at 14,296.24, a new record. The Dow is up 1.72% in the past four days, and has risen 9.1% in 2013.
Dow Jones Index
If retail investors are entering the stock market now because they believe a technical barrier has been crossed by virtue of the Dow Industrial Average breaking out to new all-time highs as of two days ago, it is likely that they could be very disappointed. This is due to the fact that many of the flows of broader indicators are not confirming a broad-based stock rally.
Similarly, the Standard & Poor’s 500 index gained 0.11% to close at 1,541.46, its highest close since Oct. 31, 2007. The index is now just 1.5% off its record close of 1,565.15, hit on Oct. 9, 2007.
However, the thin volume speaks of a lack of conviction.
Conclusion: Given the fact that retail investors are generally the last leg of a bull-market rally, it would appear to be a wise move to sell into this rally and watch for a roll-over to the downside in U.S. stock indexes. At that point, I would look at shorting the U.S. Stock Index’s expecting a 10%+ correction, given the length and breadth of this bull-market run.
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