Weekly Summary: week ended 3/12/2010

The following is a summary of the long report I send out to email subscribers:

SUMMARY AND CONCLUSION

I can’t imagine much more convincing evidence that we’re now on the next leg up of a bull market than I’ve shown today. The only major provisos are the chart of the Shanghai Index which hasn’t participated in the reversal upwards and some nagging doubts about volume.

So which of the following adages should be your guide:

Don’t look a gift horse in the mouth.

If it’s too good to be true then it probably is.

The medium/long-term trend of the market remains positive. This week the short term (daily chart) joined the other two in a bullish profile. When all three are in sync it’s probably safe to trade in the direction of the trend indicated by all three.

I’d still like to see a switch to the bullish side by the Weekly Slow Stochastic before jumping in with both feet.

I’m expecting some consolidation early in the week, with possibly some pullback. What happens in the rest of the week, I’m unsure. If the sideways-to-down movement I’m expecting early on turns into a rout and the 200-Day Moving Average is broken decisively to the down-side, then it’s time to move out of the market.

I’m not expecting that to happen.

In the longer term, I’m quite positive about the market. But over the years, I’ve come to expect that when it’s obvious – it’s obviously wrong. Watch the market – and obey what it says. A break of last week’s support and it’s all over Red Rover. A break of the November high – and it will be blue skies. In the words of Creedence Clearwater Revival, we’ll be chooglin’.

Good luck

Red