The comments below were provided by Kevin Lane of Fusion IQ.
We remain cautiously optimistic with the trend up, internals strong, the Russell 2000, the NASDAQ and now the S&P 500 at new recovery highs. Skeptics remain the loudest people in the room and while their concerns may be valid we have learned that the market rewards the minority and confounds the majority.
As seen above the S&P 500 cleared its previous resistance peak near 1,150 (lower red line) and now looks to challenge the 1,200 level. Although there may be some back and filling along the way, we have long argued that there would be one last move up driven by investors who skeptically avoided the market. The fear and greed continuim is always at play and the market somehow has a way of prying all liquidity off the sidelines eventually. We think the last holdouts are now deploying cash, believing the economy has turned the corner. (The market has been flashing the economic recovery signals for quite some time by its strength.)
We believe this current move could be a melt-up phase and once completed a move to cash would make sense. However, for now investors need to ride the wave, albeit with tight stops!
Source: Kevin Lane, Fusion IQ, March 18, 2010.
