You will recall there are two types of market analysts, i.e., technical and fundamental. To a technical analyst, they can see the future by using charts and graphs. To a technical analyst, looking at this chart tells them the market is behaving normally and should go higher:
You can see there is considerable room for the Dow to rise before it hits the red resistance line. And, notice that it actually broke through the green support line but fortunately bounced back quickly. This underscores just how vicious the downdraft was in January. The collapse of the oil market pushed the Dow below its natural level of support.
There are two types of fundamental analysts, i.e., bearish and bullish. (Sometimes, analysts change types but not often.) The bears - they will be with us always. The sky is always falling somewhere! Their strength is that they keep more cash on the sidelines, which cushions both the tops and bottoms. Their weakness is that they assume nobody has the answers, if they don't have the answers.
Bulls are also a constant on Wall Street, even though some pundits just call them "suckers." Their weakness is that they keep too little cash on the sidelines. Their strength is their assumption that things will be fine, even though they have no idea how that will happen. Paraphrasing Warren Buffet, who said he doesn't know where the stock market will be next week, but he does know where it will be ten years, which is UP.
Today, the technical analysts are agreeing with bullish fundamental analysts - Party On, Garth!
