Monday Morning Musings: What Happens After Four Straight Up Weeks?

The market has now posted four straight weekly gains, rising +2.3% last week (S&P 500), and +15% over the 4 week stretch. The last time the market experienced such a four week stretch,

back in June, it then followed up with a four week stretch of declines, albeit it mild ones.

A look at the chart of the oscillator for the Nasdaq (above) shows that market isn't really all that overbought, which is somewhat surprising given the run we've had. Nonetheless, there is a flurry of pundits out there calling for a broad market pullback.

With so many people looking for a pullback and raising cash, or positioning themselves ahead of such an event, its less likely to come to fruition. I think that's called the Heisenberg principle. I have written for months about the stairstep action in the market, and for the time being it continues. Even this morning the market has barely pulled back, although it is still early.

The dollar is up a bit today, which is weighing on gold, but oil is trading higher and boosting energy stocks. Healthcare stocks are also higher, but the rest of the sectors are lower so far.

Asian markets were up overnight. Analysts at Goldman Sachs raised their GDP forecasts for Asia. The 10-year yield is lower to 3.81%. And the VIX is higher at 25.40.

Trading comment: Taking more partial profits this morning on some individual stocks. FWLT has run up substantially since reporting earnings last week. I am trimming some shares above 30 here. Also, FIG has had a big bounce, and I want to lock in some profits there too. I would look to add back to both of these positions if they pulled back from here.

long FIG, FWLT