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Wednesday, May 15, 2013

Piling in

It is obvious from the price action that people are chasing the market higher.  Check out this chart of the Nova/Ursa ratio.

The 14 DMA of the ratio is at the highest level in the last year.  Look at all those spikes above 20 lately.  Clearly traders have become very strong believers in the rally.  On the same site is a longer term chart.  Here it is.

I have not shown this chart before because I can't really figure out exactly how I can use it.  The dates on the chart are not marked in a way that I can match up SPX with very well.  However, here in real time I can see this is the biggest flood of money into the market on the chart that goes back to 2006.  This far surpasses the Oct. 2007 peak at that market top which I circled.

The bull market is over four years old.  Lately we have had bullish magazine covers, and the biggest flood of money into the market we have had yet (a bunch of it on margin).  All this is happening while earnings guidance was lowered at the highest rate since anybody started tracking that.  We are in or close to a global recession.  These are the facts in evidence.  I guess we will see what all this adds up to.


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