Stock market finally rises above its October peak

The stock market may have finished the week with merely a so-called "whimper", but the Dow did reach two milestones on Friday, breaking out above both the psychological 12,200 level and above the October peak. Both are good news. But, a one-day "whimper" does not indicate a trend, especially when it occurs on a slow, pre-holiday, pre-weekend trading session.

 

This coming week will be another slow period where volatility could be high and "fake", temporary trends might appear and then disappear as quickly as they arise.

 

This new peak may fall as quickly as it rose, or maybe we will see a modest rally into the end of the year, but at least the good news is that we have the positive combination of "higher highs" and "higher lows" which is the hallmark of a bull market even if there are lots of intervening down days.

 

We still have quite a few psychological and technical hurdles ("resistance") to overcome before the Dow exceeds its July and April peaks, so technically the stock market will remain in a trading range for awhile longer. Traders and short-term speculators will have plenty of volatility to trade off of as market participants struggle to cope with conflicting incoming information about the state of the economy and various fiscal authorities in the coming months and year.

 

Ultimately, we are waiting for the stock market to pass judgment on the economy and start telling us where the economy is likely to be in nine months.

 

The bottom line is: 1) the stock market isn't in such bad shape, all things considered, but 2) stay tuned, since anything could happen.

-- Jack Krupansky