First to dispose of some matters we could make hype of but won’t. Last week’s power bar was followed by another Monday making us look prescient, but who cares about that –what have you done for me today?
Here is the interesting thing about these power bars — or runaway days, or explosion days or long days (make up a name for them yourself) — they almost always happen in the direction of the major trend, so if you are not fighting the trend you benefit from them. They can also be disquieting, because they are disorderly and presage more volatility — of course the pattern of alternating expanding and shrinking volatility usually rules. In this particular case, occurring within the pattern of surge, drift, flush the power bars are expected and in fact even (ta-da) predicted. Well sort of predicted. (We’re laboring not to take credit for this as well we should (not take credit)).
Here is what is disquieting at present:
The Dow blew away the old highs, and as seen from the first chart the S&P has not done that (and neither have the Qs and a number of other indices). In other words, non-confirmation.
How important is this? Probably of minimal, unless it turns out to be important, then we will look prescient again.
We’d rather not.
(Coming shortly our letter on How to Beat Death and Taxes.)