Why Stocks Are Going Higher A Simple Theory

Has the stock market reached the top? This question is bugging the mind of most stock traders and investors. What are the market analyst saying. Many think that the stock market has more gains to make. Most of these analysts are taking refuge in the Dow Theory by saying that it still works.

Dow theorists contend that when transports do well, the overall market should follow. The logic is simple. As economic activity picks up, people tend to consume more, which requires people to ship, fly and truck objects around the world. In other words, these stocks are taking the pulse of the global consumer, and right now that pulse is strong, something that should hearten the bulls.

Of course correction can come anytime. Don’t think that the stocks will go up in a straight line. There will be a few corrections on the way. These dips are the best points to enter the market.

However this analyst is concerned about the lack of market momentum and thinks that market right now lacks conviction meaning it can move both ways depending on the stimuli. U.S. stocks erased record-setting gains on Thursday afternoon, turning lower in a late-session shift despite the European Central Bank’s (ECB) unexpected announcement of rate cuts and a bond-buying program. European stock markets were also signaling a lower open on Friday and this has left Gartman dismayed that ECB President Mario Draghi hasn’t caused more of a pop for stocks.

As said above market is confused now and can move up or down depending on the new catalyst. This catalyst can be the NFP Report release that is scheduled shortly.