Heed This Warning Sign
I know that there are traders who think a new high in the S&P 500 is some kind of all-clear signal to buy the market as it inevitably heads higher. Well, in case you don't recall, that happened just a few weeks back on Aug. 21, when the index made an unconfirmed new high but the Dow Jones Industrials and Nasdaq failed to confirm it. So did the Russell 2000, as it failed to get back to its recent highs. Accordingly, I warned that a pullback was likely. So how did that supposed "buy signal" work out? Well, a couple of weeks later, the S&P 500 was 30 points lower. The Dow had dropped 350 points. You get the idea: It wasn't a great time to buy.
But that was then. Things have changed a bit since. Notably, earlier this week, I pointed out that the relative strength in the Russell 2000 was signaling a further rally, and I said that I was using the weakness to add to positions in anticipation of a pop during the strong seasonal period going into the end of the week. So here we are at new multiyear highs in the S&P 500, though unconfirmed by the Dow once again....531 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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