Last Sunday I was very wrong about my call for the week. But I think I made up for it last night when I gave nine reasons why the Dow would go up today, and only two half-hearted reasons why it might go down. Turns out 9 beats 2 every time with a whopping 168 point gain to start off July with a bang and cap off an impressive solid five day winning streak. I started a new rising regression trend channel and it came up with a Pearson coefficient of 0.991, about the highest I've ever seen. And that's reflected in the daily momentum, which now stands at 68.75.
And that's sort of a problem. We don't like to see momentum get this high because at these levels it's an overbought indicator. For that matter, RSI is now in overbought territory and the short stochastic is peaking and looking like it's about to execute a bearish crossover.
I'm going to take a longer view on the monthly chart later this weekend, but for now I will say that after this great run, my initial reaction is to be cautious for next week. More details to follow.
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