S&P and Dow Hit All Time Highs

Last week, was a key week for the major indices. The S&P and Dow hit all time highs while breaking out of a daily range at the 10 SMA. The Nasdaq Composite hit a 13-year high as it rose above its range pattern. On a solid week of trading, the S&P  gained +1.5%, the Dow climbed +1.3%, and the Nasdaq advanced +1.7%.

The strong market action shook off the two week doldrums of a rangy market hovering along the daily 10 SMA, and it shifted the Market Direction Category back to (1). Overall, the market is acting strong, however the market risk is still at a high risk level; that level will drop if the market continues to advance.

One of the major trend principles is that trends generally end in a climax. That happened in the internet bubble of 2000. Currently, we may be in a liquidity bubble due to the Feds monetary easing policy, and that could mean a strong move might still occur. While there are still some reasons for caution in the market, stocks with good 50/50 setups and good fundamentals can be bought.