The major averages have been trading sideways more or less over the last four weeks. The question remains when the Fed will slow quantitative easing which would occur when the economy shows signs of a true turnaround. But because the Fed does not want to taper too quickly, odds are that they will be dovish with respect to slowing QE so as to not upset the fragility of the recovering economy. Signs out of China and Europe show economies that may be turning the corner.
The MDM is consequently on a buy signal as price/volume of major averages and leading stocks remains constructive overall despite the large number of distribution days on the NASDAQ Composite. Constructive action in leading stocks include TSLA, PCLN, LNKD, FB, AMZN and a smattering or smaller names including YY, TRLA, YELP, MELI, VIPS, KORS, CONN, LGF, and FLT among others which are also continuing their uptrends. In this QE environment, distribution days must be taken in context with capital injections into the market which help the market tip toe higher.
That said, markets are forward looking so we will be on watch for the start of a correction. But until stronger signs are evident in the way of price/volume action, we should adhere to the saying "Don't fight the fed."
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