Written by Lance Roberts, Clarity Financial
Last week, we discussed we discussed the massive 3-standard deviation above the 50-MONTH moving average which is something rarely seen through history.
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“That extension, combined with extreme overbought conditions multiple levels, has historically not been met with the most optimistic of outcomes.
Importantly, such extensions have NEVER been resolved by a market that moved sideways. But, ‘exuberance’ of this type is not uncommon during a market ‘melt-up’ phase.”
Nothing changed this past week as the “melt-up” phase gains momentum. We are on track currently to ratchet the both the fastest and most numerous sequential milestone advances for the Dow in history.
You can barely print “Dow 2X,000” hats fast enough.
As I noted two weeks ago, we did add some defensive positions to our portfolio allocations while we still retain a fully allocated long-position as well. These defensive “shock absorbers” are simply in place to reduce a volatility shock when, not if, one occurs.