While the generals (big caps) are leading slightly, the soldiers (mid and small caps) lag with lower-than-average volume. This is generally considered a sign of weakness. However, this pattern has prevailed, with some minor exceptions, since the double-bottom of January/February.
As our readers know, I have been cautious throughout the advance, not willing to be an aggressive buyer, and I remain so. As I've said before, it is not only important what stocks do but how they do it. I've encouraged traders to trade both sides of the market and cautioned long-term investors to only buy stocks with excellent balance sheets and a history of solid earnings and dividends.
At the current high levels, I don't believe it is wise to chase stocks assuming they will continue to make new highs since companies now must depend on earnings and revenues for gains rather than the Fed.
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