Today, as we've been saying, the long-term is still very bullish, but the stock market has been overbought, and there are definite signs that this slightly out-of-breath market is going to let the hottest stocks of the last 4-6 weeks take a breather.
It is always interesting to watch the interaction between the Dow Jones Industrials Index with that of its cousin index, the Dow Jones Transportation Index. You can see the recent divergence between these two indexes in the chart below.
Click on the image above to view a larger chart.
Of course, rising gas prices have had some impact on the Transports, but it is important that we don't box ourselves into looking for some reason - besides dsyfunction - for the non-confirmation.
It is most definitely a market of stocks, and not a stock market. With the market conditions such as they are, we're seeing personality changes that will probably last at least a few months as the overbought conditions (especially of the hot stocks) start to cool a little.
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