By Nicholas Santiago on March 25th, 2010 10:53am Eastern Time
Since the last small market correction that ended on January 5th, 2010 the market has soared to new highs for the year. The SPDR S&P 500 ETF (NYSE:SPY) at that time hit a low of 104.58. Since that time, the SPY has made a new 52 week high and is now above 117.50 level; this rally represents over a 12 percent increase in about seven weeks. This is truly an amazing move higher in such a short time.
The retail sector has been very strong lately. The Retail HOLDRs ETF (NYSE:RTH) is now trading above the 100.00 level. When retail is strong it is usually an indication of a strong market. Today Best Buy Co (NYSE:BBY) reported better than expected earnings and the stock is trading sharply higher by 3.00 points to 44.17. When you combine this with comments out of Europe that Germany will help bailout Greece, we have a rally on our hands this morning.
With this massive bull run on our hands what is going to bring this market down? It will be euphoria as it always is. Once the market knows that things have improved as much as they can, only then will it decline. Usually when everyone in the public believes things are back to normal the turn will occur. Until that time enjoy the rally. Once the music stops it will turn ugly again. However, rarely does anyone ever hear that the music has stopped playing. Watch for the reversal to take place on great news and euphoria. That is often the signal that the rally has finished.
Nicholas Santiago
Chief Market Strategist
InTheMoneyStocks.com
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