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Thursday, May 7, 2009

Market Rally Continues for 8 weeks

Gold and resources have been exploding higher. The USA's food, energy, and materials (metals) are all going up in price. For this sector, this is moving up as expected, as I have ranted dozens of times. The longer term view of USA citizens eventually ending up with basic resources costing them more. Read here and here for more rants.

The S&P 500 is approaching the 200 DMA line, also predicted (Click here). The timeline for this happening is a bit sooner than expected. If your long in stocks, this is a GOLDEN time to start to lighten up, 25, 50%, something. On the graph below, notice the 3/6/09 image. Back in March remember how dismal your 401K looked? How horrified you felt over your life savings going down the toilet? Congrats! You didn't sell in the face of a panic sell off. Now is the time to lighten up somewhat. The market is up 38% in 8 weeks! If you had no stocks at all, and bought stocks 8 weeks ago, you would be a fool to not take some profits after such a huge rally, right? No different if trapped in positions at a higher price.

This rally may go another day, 3 weeks, but it won't last 6 weeks. And when this insanity fever breaks, expect the market to go significantly lower.

An interesting note, the short recommendations I blogged about (click here) FELL Wednesday, even though the DOW rallied 101 points. This was true across the board for these stocks.

So gold, food, oil, metals, all up. Great for the resource plays GDX, USL, DXO, AA, RJA, etc. The shorts I discussed down, great. The lottery tickets I recommended are up, MGM over 500% now.

Don't be greedy. Take some off the table. Even if the S&P 500 doesn't hit the 200 DMA, at this point the market has come "Close enough", like playing horse shoes, to count.

Reach out and help a close relative, today.

From WebSurfinMurf's Financial Blog

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